Suppose that a firm is currently employing 30 workers, the only variable input, at a wage rate of $60. The average product of labor is 30, the last worker added 12 units to total output, and total fixed cost is: $3,600.

a. What is marginal cost?

b. What is average variable cost?

c. How much output is being produced?

d. What is average total cost?

e. Is average variable cost increasing, decreasing or constant? What about average total cost>

Take a shot, what do you think.

Hint, MC is the cost of producing the last unit. Here, the last 12 cost $60, so MC = 60/12 = $5

To find the answers to these questions, we need to understand the concepts of marginal cost, average variable cost, average total cost, and total output.

a. Marginal cost refers to the additional cost incurred when one more unit of output is produced. It can be calculated by dividing the change in total cost by the change in output. However, we don't have the total cost data in this scenario, so we'll use the available information to calculate it indirectly.

To find the change in total cost, we need to know the total cost of producing 30 workers and then calculate the total cost of producing 31 workers. However, since we don't have that information, we can't determine the exact marginal cost.

b. Average variable cost (AVC) refers to the variable cost per unit of output. It can be calculated by dividing the total variable cost by the total output. However, we don't have the total variable cost data in this scenario, so we can't determine the exact average variable cost.

c. The average product of labor is defined as the total output divided by the number of workers. In this case, the average product of labor is given as 30. Since the average product of labor is determined by dividing the total output by the number of workers, we can calculate the total output by multiplying the average product of labor by the number of workers.

Total Output = Average Product of Labor * Number of Workers
Total Output = 30 * 30
Total Output = 900

Therefore, the firm is producing an output of 900 units.

d. Average total cost (ATC) is the total cost per unit of output. It can be calculated by dividing the total cost by the total output.

Total Fixed Cost is given as $3,600.

Total Cost = Total Fixed Cost + Total Variable Cost

Since we don't know the total variable cost, we also can't calculate the total cost, and thus we can't find the average total cost.

e. Without the ability to calculate the average variable cost and average total cost, we can't determine if they are increasing, decreasing, or constant.

In summary, based on the information provided, we can determine the total output produced but cannot calculate the marginal cost, average variable cost, or average total cost. Therefore, we cannot determine if the average variable cost and average total cost are increasing, decreasing, or constant.