Suppose That for a Particular Firm the Only Variable Input

question 200

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 four units of output are produced, the total cost is $175, and the average variable cost is $33.75. What would the average fixed cost be if ten units were produced?

• A)$4
• B)$10
• C)$40
• D)$135

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Definitions:

Marginal Revenue

The additional income generated from selling one more unit of a good or service.

Average Variable Cost

The total variable cost divided by the quantity of output produced; it represents the variable cost per unit of output.

Marginal Revenue

The additional income earned from selling one more unit of a good or service, a key factor in decision-making for producing additional units.

Marginal Revenue

The extra revenue earned by selling an additional unit of a product or service.