The following data show the total output for a firm when specified amounts of labour are combined with a fixed amount of capital.When answering the questions,you are to assume that the wage per unit of labour is $25 and the cost of the capital is $100. $$\begin{array} { | c | c | }
\hline \text { Labour per unit of time } & \text { Total output } \
\hline 0 & 0 \
\hline 1 & 25 \
\hline 2 & 75 \
\hline 3 & 175 \
\hline 4 & 250 \
\hline 5 & 305 \
\hline
\end{array}$$ TABLE 7- 4
-Refer to Table 7- 4.The average total cost for 250 units of output is approximately
A)33 cents.
B)$1.00.
C)80 cents.
D)40 cents.
E)63 cents.

Question

The following data show the total output for a firm when specified amounts of labour are combined with a fixed amount of capital.When answering the questions,you are to assume that the wage per unit of labour is $25 and the cost of the capital is $100. $$\begin{array} { | c | c | } 
\hline \text { Labour per unit of time } & \text { Total output } \
\hline 0 & 0 \
\hline 1 & 25 \
\hline 2 & 75 \
\hline 3 & 175 \
\hline 4 & 250 \
\hline 5 & 305 \
\hline
\end{array}$$ TABLE 7- 4
-Refer to Table 7- 4.The average total cost for 250 units of output is approximately
A)33 cents.
B)$1.00.
C)80 cents.
D)40 cents.
E)63 cents.

Quizplus · Accepted Answer

Average total cost = (Total cost)/(Total output)Total cost = (Wage per unit of labour * Labour per unit of time) + Cost of capitalFor 250 units of output, Labour per unit of time = 4Total cost = (25 * 4) + 100 = 180Average total cost = 180/250 = 0.80 = 80 cents

The Following Data Show the Total Output for a Firm