Suppose that a company currently employs 1 comma 000
workers and produces 4
million units of output per month. Labor is its only variable input, and the company pays each worker the same monthly wage. The company's current total variable costs equal $2
million.
Part 2
What are average variable costs at this firm's current output level?
To find the average variable cost at the current output level, we divide the total variable costs by the number of units produced.
Average Variable Cost = Total Variable Costs / Output Quantity
In this case, the total variable costs are $2 million and the output quantity is 4 million units.
Average Variable Cost = $2 million / 4 million units = $0.50 per unit
Therefore, the average variable costs at this firm's current output level are $0.50 per unit.
To calculate the average variable costs at the firm's current output level, you need to divide the total variable costs by the number of units produced.
Average Variable Costs = Total Variable Costs / Units Produced
Given that the total variable costs are $2 million and the firm's current output level is 4 million units, we can calculate the average variable costs using this formula:
Average Variable Costs = $2 million / 4 million units
Simplifying the equation:
Average Variable Costs = $0.5 per unit
Therefore, the average variable costs at this firm's current output level are $0.5 per unit.
To calculate the average variable costs at the firm's current output level, we need to use the formula: Average Variable Costs (AVC) = Total Variable Costs / Quantity of Output.
In this case, we know that the company's current total variable costs are $2 million and the quantity of output per month is 4 million units.
So, using the formula: AVC = $2 million / 4 million units = $0.50 per unit.
Therefore, the average variable costs at this firm's current output level are $0.50 per unit.