= BUS 530-Managerial Economics M2C-Production and Cost Analysis

= BUS 530-Managerial Economics M2C-Production and Cost Analysis
Order Description
Production and Cost Analysis

Assignment

The followin” rel=”nofollow”>ing table gives the total weekly output of bicycles at Al’s Bicycle Town.

Table 1

Labor Total Product (TP) Average Product of labor (AP) Margin” rel=”nofollow”>inal Product of labor (MP)

0 0 na na

1 100 100 100

2 300 —– ___

3 450 ___ ___

4 ___ ___ 110

5 630 ___ ___

6 ___ 110 ___
•Complete this table.
•Draw the graphs of the margin” rel=”nofollow”>inal product (MP) and the average product (AP).
•To learn how to plot the data in” rel=”nofollow”>in Excel, see https://www.youtube.com/watch?v=B3U9tDcoNeI
•Where do the AP and MP curve cross?

The cost of 1 worker is $2000 per month. Total fixed cost is $4000 per month.
•Complete Table 2 usin” rel=”nofollow”>ing your answers from Table 1 and by computin” rel=”nofollow”>ing total variable cost (TVC) and total cost(TC).

Table 2

Labor Total Product (TP) Total variable cost (TVC) Total cost (TC)

0 0 na 4000

1 100 2000 ___

2 300 —– ___

3 450 ___ ___

4 ___ ___ 12000

5 630 ___ ___

6 ___ 12000 ___
•Draw the graphs of the TC and TVC curves. What is the relationship between these two curves?
•Complete Table 3 by usin” rel=”nofollow”>ing your answers from the previous Tables and calculatin” rel=”nofollow”>ing the AVC, ATC, and MC.

Table 3

Total Product (TP) Average variable cost (AVC) Average total cost (ATC) Margin” rel=”nofollow”>inal cost (MC)

0 na na na

100 20 ___ 20

300 —– ___ ___

450 ___ ___ ___

___ ___ 21.43 ___

630 ___ ___ ___

___ ___ ___ 66.67
•Draw the graphs of the ATC, AVC, and MC curves. What is the relationship between the ATC and AVC curves? Between the MC and AVC curves?

Suppose that Al discovers new technology that boosts the productivity of his workers, so that more bicycles can be produced than before.
•Complete Table 4, which presents production data with the new technology.

Table 4

Labor Total Product (TP) Average Product of labor (AP) Margin” rel=”nofollow”>inal Product of labor (MP)

0 0 na na

1 120 120 120

2 360 —– ___

3 540 ___ ___

4 672 ___ ___

5 756 ___ ___

6 792 ___ ___

Al’s fixed cost remain” rel=”nofollow”>ins at $4000, and he can contin” rel=”nofollow”>inue to hire workers at the monthly rate of $2000.
•Use the new technology data to complete Tables 5 and 6.

Table 5

Labor Total Product (TP) Total variable cost (TVC) Total cost (TC)

0 0 na ___

1 120 ___ ___

2 360 —– ___

3 540 ___ ___

4 672 ___ ___

5 756 ___ ___

6 792 ___ ___
•Draw the ATC and MC curves you just entered in” rel=”nofollow”>in Table 5. How do the old and new ATC curves compare? The old and the new MC curves?

Table 6

Total Product (TP) Average variable cost (AVC) Average total cost (ATC) Margin” rel=”nofollow”>inal cost (MC)

0 na na na

120 ___ ___ ___

360 —– ___ ___

540 ___ ___ ___

672 ___ ___ ___

756 ___ ___ ___

792 ___ ___ ___

Return to the old technology data. Suppose that the cost of Al’s fixed in” rel=”nofollow”>inputs remain” rel=”nofollow”>ins the same at $4000, but the cost of labor rises. Specifically, suppose that a worker now receives $3000 per month.
•Complete Table 7. For the two missin” rel=”nofollow”>ing TP copy your answers from Table 1

Table 7

Labor Total Product (TP) Total variable cost (TVC) Total cost (TC)

0 0 na 4000

1 100 3000 ___

2 300 —– ___

3 450 ___ ___

4 ___ ___ 16000

5 630 ___ ___

6 ___ 18000 ___

In Table 8 compare the cost before and after the in” rel=”nofollow”>increase

Table 8

Before the in” rel=”nofollow”>increase After the in” rel=”nofollow”>increase

TP ATC MC ATC MC

0 ___ ___ ___ ___

100 ___ ___ ___ ___

300 ___ ___ ___ ___

450 ___ ___ ___ ___

___ ___ ___ ___ ___

630 ___ ___ ___ ___

___ ___ ___ ___ ___
•Last question: how did the rise in” rel=”nofollow”>in variable costs affect the average total cost? The margin” rel=”nofollow”>inal cost?

Assignment Expectations

In the Assignment, you are expected to:
•Describe the purpose of the paper and provide a conclusion.
•Present in” rel=”nofollow”>information in” rel=”nofollow”>in a professional manner.
•Answer the Case Assignment questions clearly and provide necessary details.
•Write clearly and correctly—that is, no poor sentence structure, no spellin” rel=”nofollow”>ing and grammar mistakes, and no run-on sentences.
•Provide citations to support your argument and place references on a separate page. (All the sources that you listed in” rel=”nofollow”>in the references section must be cited in” rel=”nofollow”>in the paper.) Use APA format to provide citations and references [https://owl.english.purdue.edu/owl/resource/560/01/].
•Type and double-space the paper.
•Whenever appropriate, please use Excel to show supportin” rel=”nofollow”>ing computations in” rel=”nofollow”>in an appendix, present economic in” rel=”nofollow”>information in” rel=”nofollow”>in tables, and use the data to answer follow-up questions.

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