Table 13-6
Consider the following information about baseball production at Bobby's Baseball Factory.

$$\begin{array} { | c | c | }
\hline \begin{array} { c }
\text { Labor } \
\text { (Number of workers) }
\end{array} & \begin{array} { c }
\text { Marginal Product } \
\text { (Baseballs) }
\end{array} \
\hline 1 & 3 \
\hline 2 & 5 \
\hline 3 & 8 \
\hline 4 & 10 \
\hline 5 & 7 \
\hline 6 & 4 \
\hline 7 & 2 \
\hline
\end{array}$$

-Refer to Table 13-6. Bobby pays all his workers the same wage, and labor is his only variable cost. From this information we can conclude that Bobby's average variable cost decreases
A)as output rises from 0 to 10, but rises after that.
B)as output rises from 0 to 26, but rises after that.
C)as output rises from 0 to 33, but increases after that.
D)continually as output rises.

Question

Table 13-6
Consider the following information about baseball production at Bobby's Baseball Factory.
​
 $$\begin{array} { | c | c | } 
\hline \begin{array} { c } 
\text { Labor } \
\text { (Number of workers) }
\end{array} & \begin{array} { c } 
\text { Marginal Product } \
\text { (Baseballs) }
\end{array} \
\hline 1 & 3 \
\hline 2 & 5 \
\hline 3 & 8 \
\hline 4 & 10 \
\hline 5 & 7 \
\hline 6 & 4 \
\hline 7 & 2 \
\hline
\end{array}$$ ​
​
-Refer to Table 13-6. Bobby pays all his workers the same wage, and labor is his only variable cost. From this information we can conclude that Bobby's average variable cost decreases
A)as output rises from 0 to 10, but rises after that.
B)as output rises from 0 to 26, but rises after that.
C)as output rises from 0 to 33, but increases after that.
D)continually as output rises.

Quizplus · Accepted Answer

The average variable cost decreases as long as the marginal product of labor is increasing, which happens until the 4th worker (total output of 26 baseballs). After that, the marginal product decreases, leading to an increase in average variable cost.

Table 13-6 Consider the Following Information About Baseball Production at Bobby's

Table 13-6
Consider the Following Information About Baseball Production at Bobby's