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:

Ethanol

A volatile, flammable, colorless liquid alcohol, used as a solvent and in the manufacture of organic chemicals and biofuels.

Methanol

A simple alcohol with the formula CH₃OH, used as a solvent, antifreeze, fuel, and as feedstock for chemical synthesis.

Balanced Equation

A chemical equation in which the number of atoms for each element is the same on both the reactant and product sides.

Propanol

An alcohol with the chemical formula C3H8O, used as a solvent and antiseptic.