Suppose that for a particular firm the only variable input into the production process is labor and that output equals zero when no workers are hired. In addition, suppose that marginal cost of the third worker hired is $40, and the average total cost when three workers are hired is $50. What is the total cost of production when three workers are hired?
A)$50
B)$90
C)$120
D)$150

Question

Quizplus · Accepted Answer

The total cost of production when three workers are hired is the average total cost multiplied by the quantity of output produced. Since the average total cost is $50 and the marginal cost of the third worker is $40, the total cost when three workers are hired is $50 * 3 = $150.

Suppose That for a Particular Firm the Only Variable Input