Question 4 Andrea Mowry is a knitwear designer, and she has a firm DreaReneeKnits. She uses knitters as labour and only uses one variable cost – yarn – and one fixed cost – the price of knitting needles. She pays R100 for a knitter, R50 for yarn and R100 for knitting needles. Use this information to complete the table values askes and questions below. Labour TP MP AP TFC TVC TC ATC MC 0 0 - - 100 0 100 - - 1 2 2 2 100 150 250 125 150 2 5 (a) 2.5 100 300 (d) (e) 66.67 3 9 4 3 100 450 550 61.11 (f) 4 12 3 (b) 100 (c) 700 58.33 50 5 14 2 2.8 100 750 850 60.71 75 a. Complete values a-f. b. Using to the law of diminishing returns, place the concepts in order in which they reach their turning points: average product, total product, marginal product. c. In the example above, at what value does average total cost and marginal cost reach their turning point? d. Beyond the turning point in average variable cost, marginal cost lies _______ average variable cost.
Question 4
Andrea Mowry is a knitwear designer, and she has a firm DreaReneeKnits. She uses knitters
as labour and only uses one variable cost – yarn – and one fixed cost – the price of knitting
needles. She pays R100 for a knitter, R50 for yarn and R100 for knitting needles. Use this
information to complete the table values askes and questions below.
Labour TP MP AP TFC TVC TC ATC MC
0 0 - - 100 0 100 - -
1 2 2 2 100 150 250 125 150
2 5 (a) 2.5 100 300 (d) (e) 66.67
3 9 4 3 100 450 550 61.11 (f)
4 12 3 (b) 100 (c) 700 58.33 50
5 14 2 2.8 100 750 850 60.71 75
a. Complete values a-f.
b. Using to the law of diminishing returns, place the concepts in order in which they
reach their turning points: average product, total product, marginal product.
c. In the example above, at what value does
their turning point?
d. Beyond the turning point in average variable cost, marginal cost lies _______
average variable cost.
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