Suppose that in the short run, the wage rate is $10 per worker and capital costs...
Suppose that in the short run, the wage rate is $10 per worker and capital costs are fixed at $100. If the firm employs 5 workers, it will be able to produce 20 units of output. What is the average total cost of producing 20 units of output?
- $7.50
- $4
- $2.50
- $0.40
- None of the above
Homework Answers
Ans) the correct option is a) $ 7.50
Total cost = 5*10 + 100 = 150
Average total cost = 150/20 = 7.50
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Suppose that in the short run, the wage rate is $10 per worker
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2. Short-run versus long-run costs and expenditures Aa Aa - The following isoquants depict the technologically efficient bundles of labor and capital for producing 100, 150, and 175 units of output (labeled IQ IQ - 100), IQ IQ - 150), and IQ IQ = 175), respectively). Suppose the firm is initially using the cost-minimizing bundle of labor and capital for producing 150 units of output, represented by point CAPITAL 10 10 - 1751 100 - 1501 Ti 01...
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