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Homework answers / question archive / Andrew's Big Burger is a small restaurant that sells hamburgers

Andrew's Big Burger is a small restaurant that sells hamburgers. For Andrew, grills are a fixed input and workers are variable inputs. Assume that labor is Andrew's only variable cost. Andrew has a fixed cost of $100 per day and pays each of his workers $100 per day.

Andrew's total output schedule and total cost at each level of labor are presented in the following table.

Fill in the blanks to complete the Marginal Product column for each worker and the Marginal Cost column at each level of labor. (Hint: Marginal cost is the change in total cost divided by the change in the quantity of output. You can calculate it here by dividing the increase in total cost from hiring one more worker by the marginal product from hiring one more worker.)

Labor Input (Number of Workers) Total Output Marginal Product (Burgers per day) (Burgers per day) Total Cost (Dollars per day) 0 0 $100 1 50 S200 150 2 $300 200 3 $400 225 4 $500 235 5 6,00

When hiring the first and second workers, Andrew's Big Burger faces

Marginal Cost

(Dollars per burger)

s 'S

IS

marginal returns to labor.

Over the range of workers for which the marginal product is increasing, Andrew's Big Burger faces

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