Question

In the short run these workers are variable inputs, and the ovens are fixed inputs.

 labor Output marginal product of labor 0 0 1 50 50 2 90 40 3 120 30 4 140 20 5 150 10

Marginal product of labor = (change in output / change in labor)

 labor Output Fixed cost Variable cost Total cost 0 0 30 0 30 1 50 30 30 60 2 90 30 60 90 3 120 30 90 120 4 140 30 120 150 5 150 30 150 180

Fixed cost =\$30 and it remains same at each level of output.

Variable cost = Wage rate * No. of labor

Variable cost = \$30 * No of labor

Total Cost = Fixed cost + Variable cost.

The law of diminishing marginal product of labor implies an increase in total output at a decreasing rate as the number of labor increases.

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