The table above shows the total product schedule. Suppose that labor costs $20 per worker and...
Question:
| Labor (Workers) | Output |
| 0 | 0 |
| 1 | 20 |
| 2 | 50 |
| 3 | 70 |
| 4 | 80 |
| 5 | 85 |
The table above shows the total product schedule. Suppose that labor costs $20 per worker and fixed costs are $60. What is the average variable cost per unit when producing 80 units?
A) $0.25
B) $1.00
C) $1.75
D) $0.75
E) $20
Variable Cost:
Variable cost is the cost of production which increases with increase in the level of output. Average variable cost is the cost per unit of output. It is calculated by dividing variable cost by the number of units produced.
{eq}AVC = VC/Q {/eq}
Answer and Explanation: 1
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View this answer| Q | FC | VC | AVC |
|---|---|---|---|
| 0 | 60 | 0 | 0 |
| 1 | 60 | 20 | 20 |
| 2 | 60 | 40 | 20 |
| 3 | 60 | 60 | 20 |
| 4 | 60 | 80 | 20 |
| 5 | 60 | 100 | 20 |
The correct option is (E). The average variable cost of producing 80 units of output is $20.
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