# Suppose that a firm has only one variable input, labor, and firm output is zero when labor is...

## Question:

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

## Variable Cost:

Cost of production is an important determinant in the firm's production decision. There are different kinds of costs of which one is a variable cost. It is the cost that varies with the level of production of the factors used in the production say labor.

## Answer and Explanation: 1

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View this answer**The correct answer is option d) 75cents.**

It is given that the fixed cost (FC) is $6 and the variable cost (VC) is $10 per unit of labor. The output...

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Chapter 23 / Lesson 7Understand variable cost in business. Learn the definition of variable cost, the variable cost formula, and how to use the formula to calculate the variable cost.

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