-Given the information in the table above, suppose labor is the only variable input. The price of labor is $400 per week and total fixed costs are $1,000 per week. If the firm wants to minimize its average total cost, it should produce
A) 100 units.
B) 140 units.
C) 170 units.
D) 190 units.

Question

-Given the information in the table above, suppose labor is the only variable input. The price of labor is $400 per week and total fixed costs are $1,000 per week. If the firm wants to minimize its average total cost, it should produce
A) 100 units. 
B) 140 units. 
C) 170 units. 
D) 190 units.

Quizplus · Accepted Answer

To minimize average total cost (ATC), the firm should produce at the output level where ATC is lowest. ATC is calculated as (Total Fixed Costs + Total Variable Costs) / Quantity. Given the price of labor and fixed costs, calculate ATC for each output level and choose the one with the lowest ATC.

-Given the Information in the Table Above, Suppose Labor Is