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:

Degrees of Freedom

Degrees of freedom refer to the number of values in a calculation which are free to vary without violating the constraints of the calculation.

Chi-Square

A statistical test used to determine if there is a significant difference between observed frequencies and expected frequencies in categorical datasets.

Row Variable

A row variable in statistical or data analysis refers to a variable that is presented horizontally in a table or dataset, representing different categories or groups for analysis.

Column Variable

A variable whose values are laid out in columns in a table or dataset, facilitating vertical comparison across data points.