micro

Production Function
K (fixed)
w
material
price of K "r" (per unit)

Capital

25SQRT(K*L)
1000
20
0.5
250

Labor

K

L
1000
1000
1000
1000
1000
1000

Output Marginal Average
(total Product of Product of
product)
Labor
Labor

Fixed Cost

Variable
Cost

=change in
q/change in
L

=q/L

=r*K

=m*q +
w*L

MPL

APL

q
0
1
2
3
4
5

0
790.5694
1118.034
1369.306
1581.139
1767.767

790.5694
327.4646
251.2724
211.8324
186.6281

790.5694
559.017
456.4355
395.2847
353.5534

$
$
$
$
$
$

FC
250,000.00
250,000.00
250,000.00
250,000.00
250,000.00
250,000.00

VC
$
$
$
$
$

415.28
599.02
744.65
870.57
983.88

Total Cost

$
$
$
$
$
$

TC
250,000.00
250,415.28
250,599.02
250,744.65
250,870.57
250,983.88

Average
Marginal Average
Average
Variable
Cost
Fixed Cost
Total Cost
Cost
=change in
TC/ change
in q

=FC/q

=VC/q

=TC/q

MC

AFC

AVC

ATC

$
$
$
$
$

0.53
0.56
0.58
0.59
0.61

$
$
$
$
$

316.23
223.61
182.57
158.11
141.42

$
$
$
$
$

0.53
0.54
0.54
0.55
0.56

$
$
$
$
$

316.75
224.14
183.12
158.66
141.98