-The table above gives a firm's total product schedule. Suppose labour is the only variable factor of production. The price of labour is $500 per worker per week and total fixed costs are $600 per week. If 95 units are produced, the average total cost is
A) $6.31.
B) $26.32.
C) $17.45.
D) $32.63.

Question

-The table above gives a firm's total product schedule. Suppose labour is the only variable factor of production. The price of labour is $500 per worker per week and total fixed costs are $600 per week. If 95 units are produced, the average total cost is
A) $6.31. 
B) $26.32. 
C) $17.45. 
D) $32.63.

Quizplus · Accepted Answer

To find the average total cost (ATC), we need to calculate the total cost (TC) and divide it by the quantity produced. TC is the sum of total fixed costs (TFC) and total variable costs (TVC). If 95 units are produced, we need to determine how many workers are required to produce 95 units and multiply that by the price of labor ($500). Add the TFC ($600) to get the TC. Then, divide the TC by 95 to find the ATC. The correct calculation leads to an ATC of $32.63.

-The Table Above Gives a Firm's Total Product Schedule