Suppose That for a Particular Firm the Only Variable Input

question 246

Multiple Choice

Suppose that for a particular firm the only variable input into the production process is labor and that output equals zero when no workers are hired. In addition, suppose that when the firm hires 2 workers, the total cost of production is $100. When the firm hires 3 workers, the total cost of production is $120. In addition, assume that the variable cost per unit of labor is the same regardless of the number of units of labor that are hired. What is the firm's fixed cost?

• A)$40
• B)$60
• C)$80
• D)$100

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Definitions:

Merchant

An individual or company engaged in the buying and selling of goods or services in commerce, especially one dealing in a specific commodity or operating in a particular sector.

Special Knowledge

Extraordinary or advanced understanding and information in a particular field or subject, beyond that of the average person.

Unconscionable Clause

A term in a contract deemed so unjust that it is unenforceable under the law.

Voidable Title

A legal concept indicating that a title or ownership can be rendered invalid by a court if certain conditions are met.