Wednesday

July 30, 2014

July 30, 2014

Posted by **Dede** on Wednesday, November 3, 2010 at 7:48pm.

a. What is marginal cost?

b. What is average variable cost?

c. How much output is being produced?

d. What is the average total cost?

e. Is average variable cost increasing, constant, or decreasing?

- Managerial Economics -
**Dede**, Wednesday, November 3, 2010 at 7:59pmPlease let me know if I am on the right track?

a) The firm paid the last hired worker $100 and he produced 10 units. So, cost of producing the last unit (MC) is 100/10 = $10

b) The firm hires 10 workers and pays them $100 each, so Total variable costs are 10*100 = 1000. On average, a worker makes 25 units, so total units are 25*30 = 750. So, the average variable cost of producing a unit (AVC) is = 1000/750 = 1.33.

c) 750 from b)

d) Total fixed costs are total variable costs (1000) plus total fixed costs (given at $5000). So, TC = 5000+1000 = 6000. Average total costs = TC/Q = 6000/750 =8.

e) Since the marginal (last) worker added 10 unit and the overall average is 25 units, average variable costs must be rising. If AVC is rising, TVC must also be rising.

**Related Questions**

Managerial ECON - Suppose that a firm is currently employing 10 workers, the ...

managerial eccon - Suppose that a firm is currently employing 30 workers, the ...

Economics - Suppose that a firm is currently employing 30 workers, the only ...

Economics - Suppose that a firm is currently employing 30 workers, the only ...

Managerial ECON - Suppose that a firm is currently employing 20 workers, the ...

economics - Suppose that for the firm below, the goods market is perfectly ...

Math/Economics - Suppose that a firm has only one variable input, labor, and ...

Math/Economics - Suppose that a firm has only one variable input, labor, and ...

Economics (attempted as suggested by economyst) - Posted by eStone on Sunday, ...

economics (micro) - 2. In the table below, assume a monopsonist has the marginal...