Suppose That the Firm's Only Variable Input Is Labor

question 53

Multiple Choice

Suppose that the firm's only variable input is labor.When 50 workers are used,the average product of labor is 50 and the marginal product of labor is 75.The wage rate is $80 and the total cost of the fixed input is $500.What is average total cost?

• A)$0.825
• B)$0.63
• C)$1.80
• D)$4.10
• E)none of the above

Understand the principles of cost behavior and how it impacts managerial accounting.

Identify and define variable, fixed, and mixed costs.

Analyze how variable and fixed costs affect the financial operations of a business.

Grasp the importance of choosing the appropriate activity base for costs.

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Definitions:

Income-tax System

A government system for assessing and collecting taxes on the income of individuals and businesses.

Ability-to-pay Principle

A taxation principle suggesting that taxes should be levied according to an individual's or entity's capacity to pay, typically measured by income or wealth.

U.S. Labor Force

The total number of people in the United States who are employed or actively seeking employment.

U.S. Governments

The federal government of the United States, composed of three branches: legislative, executive, and judicial.