A+ Tutorial: Economics- Marty’s Frozen Yogurt
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Marty’s Frozen Yogurt is a small shop that sells cups of frozen yogurt in a university town. Marty owns three frozen-yogurt machines. His other inputs are refrigerators, frozen-yogurt mix, cups, sprinkle toppings, and, of course, workers. He estimates that his daily production function when he varies the number of workers employed (and at the same time, of course, yogurt mix, cups, and so on) is as shown in the accompanying table.
a. What are the fixed inputs and variable inputs (sort out the examples from the question) in the production of cups of frozen yogurt? (12pts)
b. Draw the total product curve. Put the quantity of labor on the horizontal axis and the quantity of frozen yogurt on the vertical axis. (8pts)
- See ‘How to do the Graphs’ in the Doc Sharing for graphing methods -
c. What is the marginal product of the first worker? (2pts)
The second worker? (2pts)
The third worker? (2pts)
Why does marginal product decline as the number of workers increases? (4pts)
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