A firm currently uses 40,000 workers to produce 180,000 units per day. The daily wage per worker is $100, and the price of the firm’s output is $28. The cost other variable input is $500,000 per day. (Note assume that output is constant at the level of 180,000 units per day.)
Total Variable Cost
Total Cost
Average Variable Cost
Average Total Cost
Total Variable Cost = (Number of Workers x Worker’s Daily Wage) + Other Variable Costs
Total Costs = Total Variable Costs + Total Fixed Costs
Total Revenue = Price * Quantity
Average Variable Cost = Total Variable Cost / Units of Output per Day
Average Total Cost = (Total Variable Cost + Total Fixed Cost) / Units of Output per Day
Complete the following:
TVR = 4,500,000
TV = 5,700,000
AVC = 25
ATC =11.4
To calculate the different costs in this scenario, we need to use the following formulas:
1. Total Variable Cost (TVC) = Number of Workers * Daily Wage per Worker + Cost of Other Variable Inputs
2. Total Cost (TC) = TVC
3. Average Variable Cost (AVC) = TVC / Number of Units
4. Average Total Cost (ATC) = TC / Number of Units
Let's calculate each one step-by-step:
1. Total Variable Cost (TVC):
TVC = 40,000 workers * $100 daily wage per worker + $500,000 cost of other variable inputs
TVC = $4,000,000 + $500,000
TVC = $4,500,000
2. Total Cost (TC):
Given that output is constant at 180,000 units per day, the Total Cost (TC) will be the same as the Total Variable Cost (TVC) in this scenario:
TC = TVC
TC = $4,500,000
3. Average Variable Cost (AVC):
AVC = TVC / Number of Units
AVC = $4,500,000 / 180,000 units
AVC ≈ $25 per unit
4. Average Total Cost (ATC):
ATC = TC / Number of Units
ATC = $4,500,000 / 180,000 units
ATC ≈ $25 per unit
Therefore, the Total Variable Cost is $4,500,000.
The Total Cost is also $4,500,000.
The Average Variable Cost is approximately $25 per unit.
The Average Total Cost is also approximately $25 per unit.
To calculate Total Variable Cost (TVC):
TVC = Number of workers * Daily wage per worker
Given that the firm uses 40,000 workers and each worker's daily wage is $100, we can calculate TVC as follows:
TVC = 40,000 * 100 = $4,000,000 per day
To calculate Total Cost (TC), we need to consider both Variable Costs and Fixed Costs. In this case, there is only one variable cost, which is the wage, while the other costs are fixed. Therefore:
TC = TVC + Total Fixed Cost
However, the given information doesn't provide the value of Total Fixed Cost. Without this information, we cannot calculate TC accurately. If you have that information, you can simply add it to TVC to find TC.
To calculate Average Variable Cost (AVC):
AVC = TVC / Number of units produced per day
Given that 180,000 units are produced per day and TVC is $4,000,000, we can calculate AVC as follows:
AVC = 4,000,000 / 180,000 = $22.22 per unit
To calculate Average Total Cost (ATC):
ATC = TC / Number of units produced per day
Since we don't have the value for TC, we cannot calculate ATC accurately. However, if you have that value, you can calculate ATC by dividing TC by the number of units produced per day.