Pizza Work hours M workers or the change in Work hours MC(at a wage of $20/hour), inputs at $4 MPL amount that one

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Pizza Work hours M workers or the change in Work hours MC(at a wage of $20/hour), inputs at $4 MPL amount that one worker would produce 1 0.3 2 0.7 3 1.2 4 1.8 5 2.5 6 3.3 7 4.2 8 5.2 9 6.3 10 7.5 Demand is strong and Antonio's can sell more pizza 1. In the short-run, how can they increase production? 2. Fill in the table. After the first pizza, what happens to the time needed for each additional pizza? Why? What happens to the marginal product of labor? What happens to marginal costs? 3. If ingredients are $4 per pizza and wage $20, how many pizzas will Antonio's offer to sell at $12 pizza? How many at $20?

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1) Antonio can increase production by employing more working hours to produce more pizzas. 2) L(work hours) TP(Pizza) Change in work hours TC(input cost +Wage) Marginal cost MP_L TR MR MRP(P=$12) MRP(P=$20) 0.3 1 0.3 10 10 - 12 - - - 0.7 2 0.4 22 12 2.5 24 12 30 50 1.2 3 0.5 36 14 2 36 12 24 40 1.8 4 0.6 52 16 1.67 48 12 20 33.33 2.5 5 0.7 70 18 1.428 60 12 17.14 28.57 3.3 6 0.8 90 20 1.25 72 12 15 25 4.2 7 0.9 112 22 1.11 84 12 13.33 22.22 5.2 8 1 136 24 1 96 12 12 20 6.3 9 1.1 162 26 0.909 108 12 10.90 18.18 7.5 10 1.2 190 28 0.83 120 12 10 16.67 After the first pizza, the time needed for each additional pizza increases which might be the case because of law of diminishing returns. Marginal product for labor decreases with increase in labor while the marginal cost increases with increase in labor. 3) We can see from the table that when price of pizza is $12, around 5 pizzas will be sold. It is the level at which the marginal cost equals the marginal revenue product of labor. Also when the price increases to $20, now the firm will make 7 pizzas. Beyond this at p=$20, the increase in MRP is less than the increase in the marginal cost.

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Pizza Work hours M workers or the change in Work hours MC(at a wage of $20/hour), inputs at $4 MPL amount that one worker would produce 1 0

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Pizza	Work hours	M workers or the change in Work hours	MC(at a wage of $20/hour), inputs at $4	MPL amount that one worker would produce
1	0.3
2	0.7
3	1.2
4	1.8
5	2.5
6	3.3
7	4.2
8	5.2
9	6.3
10	7.5

L(work hours)	TP(Pizza)	Change in work hours	TC(input cost +Wage)	Marginal cost	MP_L	TR	MR	MRP(P=$12)	MRP(P=$20)
0.3	1	0.3	10	10	-	12	-	-	-
0.7	2	0.4	22	12	2.5	24	12	30	50
1.2	3	0.5	36	14	2	36	12	24	40
1.8	4	0.6	52	16	1.67	48	12	20	33.33
2.5	5	0.7	70	18	1.428	60	12	17.14	28.57
3.3	6	0.8	90	20	1.25	72	12	15	25
4.2	7	0.9	112	22	1.11	84	12	13.33	22.22
5.2	8	1	136	24	1	96	12	12	20
6.3	9	1.1	162	26	0.909	108	12	10.90	18.18
7.5	10	1.2	190	28	0.83	120	12	10	16.67