Question

2. Inputs and outputs Ana's Performance Pizza is a small restaurant in Miami that sells gluten-free pizzas. Ana's very tiny kitchen has barely enough room for the three ovens in which her workers bake the pizzas. Ana signed a lease obligating her to pay the rent for the three ovens for the next year. Because of this, and because Ana's kitchen cannot fit more than three ovens, Ana cannot change the number of ovens she uses in her production of pizzas in the short run. However, Ana's decision regarding how many workers to use can vary from week to week because her workers tend to be students. Each Monday, Ana lets them know how many workers she needs for each day of the week. In the short run, these workers are inputs, and the ovens are inputs. Ana's daily production schedule is presented in the following table. Fill in the blanks to complete the Marginal Product of Labor column for each worker. Labor (Number of workers) Output (Pizzas) Marginal Product of Labor (Pizzas) 0 0 1 100 2 180 MMA 3 240 4 280 5 300

Answer 1

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

Explanation:

Fixed costs are available even at zero level of output and remain constant throughout the subsequent level of production. On the other hand variable costs vary with the level of production.

Ans:

Labor ( Number of workers)	Output (Pizzas)	Marginal Product of Labor ( Pizzas)
0	0	--
1	100	100
2	180	80
3	240	60
4	280	40
5	300	20

Explanation:

Marginal Product of Labor = Change in total output / Change in number of labor

Ans: Ana's production function is shown in the following diagram.

300 270 240 210 180 QUANTITY OF OUTPUT (Pizzas) 150 120 Production Function 90 60 30 0 0 1 2 3 4 5 LABOR (Number of workers)

Ans:

300 270 240 210 180 TOTAL COST ( Dollars) 150 -Total Cost 120 90 60 30 0 0 30 60 240 270 300 90 120 150 180 210 QUANTITY OF OUTPUT (Pizzas)

Explanation:

Total Cost = Total fixed cost + Total variable cost

Labor ( Number of workers)	Output (Pizzas)	Fixed cost ($)	Variable cost ($)	Total cost ($)
0	0	50	0	50
1	100	50	40	90
2	180	50	80	130
3	240	50	120	170
4	280	50	160	210
5	300	50	200	250

Ans: False

Explanation:

In the above scenario , the shape of the production function reflects the law of decreasing marginal returns.