The Capital Stock Is Fixed at 50 Units,the Price of Capital

question 25

Multiple Choice

The capital stock is fixed at 50 units,the price of capital is $30 per unit,and the price of labor is $25 per unit. $$\begin{array} { c c } \text { Output } & \begin{array} { c } \text { Average} \\\text { Variable Cost }\end{array} \\\hline 10 & \$ 40 \\20 & 30 \\30 & 45 \\40 & 60\end{array}$$ Given the above,if the firm produces 20 units of output,what is average fixed cost?

• A)$1.50
• B)$50
• C)$150
• D)$600
• E)none of the above

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Definitions:

Shift Right

In economic terms, a shift to the right of a demand or supply curve represents an increase in demand or supply.

Remaining Firms

The number of businesses that continue to operate in a market after others have exited, often in response to economic conditions or competitive pressures.

Demand Curve

A graphical representation showing the relationship between the price of a good and the quantity demanded by consumers at those prices.

Long-Run Equilibrium

A state in a market where all firms are making zero economic profit, input factors are fully adjustable, and no firm has an incentive to enter or exit the market.