Q3 (3 marks)

Suppose a firm producing baseball, it is operating in the short run. The price of baseball is $5,

the hourly wage is $12, and each baseball requires $1 worth of material. The firm has

experimented with different workforces and the results are shown in the first two columns

of the following table.

1. Fill in the blanks in the table.

2. Is it sensible to continue to operate at a loss with 14 workers?

3. Would it be better to operate with 15 workers? Explain, using the marginal principle.

Workers Baseball

14

15

56

60

Labour Material Variable Total

Cost

Cost

Cost

Revenue

Marginal

Cost