Question

Suppose Kis the fixed input and L the variable input. Price of K = $6; Price of L=? KLTP MP|FC|VC TC AFC AVC ATC MC O 90 al 1
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Answer #1

Answer

Option 2

$10

The price of L is wage.

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Total product of n inputs =sum of an MP

Total product of 1 labour =2 units

Total variable cost =AVC*TP

TVC (2) =5*2=10

MC (n) = (TVC (n)-TVC (p))/ (n-p)

It is true for n>p and n and p are non negative

TVC (n) =total variable cost of n units

TVC (p) = total variable cost of p units

MC (2) = (10-0)/ (2-0) =5

=======

Wage =MC*MP

Wage =5*2=10

The wage is $10

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