Suppose That a Firm Has Only One Variable Input, Labor

question 109

Multiple Choice

Suppose that a firm has only one variable input, labor, and firm output is zero when labor is zero. When the firm hires 6 workers the firm produces 90 units of output. Fixed costs of production are $6 and the variable cost per unit of labor is $10. The marginal product of the seventh unit of labor is 4. Given this information, what is the average variable cost of production when the firm hires 7 workers?

• A)$12.67
• B)$11
• C)81 cents
• D)75 cents

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Definitions:

Civil Law

Civil law is a legal system originating in Europe, characterized by comprehensive statutes and codes that lay out legal rules, eschewing much of the common law's tradition of judge-made precedent.

Plea Bargain

A legal agreement where an accused agrees to plead guilty to a lesser charge in exchange for a lighter sentence.

Misdemeanor

A criminal offense considered less severe than a felony, typically punishable by fines, community service, or imprisonment for less than one year.

Mediation

A form of alternative dispute resolution where a neutral third party helps disputing parties to come to a mutually acceptable agreement.