Refer to the Following

question 78

Multiple Choice

Refer to the following:

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 variable cost?

• A) $0.63
• B) $1.60
• C) $3.20
• D) $10.00
• E) none of the above

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Definitions:

Double-Declining-Balance Method

An accelerated depreciation technique that depreciates assets faster than traditional straight-line depreciation.

Straight-Line Depreciation

Method that allocates the depreciable cost of an asset in equal periodic amounts over its useful life

Book Value

The net value of a company's assets as found on its balance sheet, calculated by subtracting total liabilities from total assets.

Depreciable Asset

An asset that loses value over time due to wear and tear or obsolescence, and its cost is allocated over its useful life through depreciation.