The following table gives information about the relationship between input quantities and real domestic output in a hypothetical economy: If the price of each input is $5, the per unit cost of production in the above economy is:
A)$5
B)$2.75.
C)$2.50.
D)$.40.

Question

The following table gives information about the relationship between input quantities and real domestic output in a hypothetical economy:  If the price of each input is $5, the per unit cost of production in the above economy is:
A)$5 
B)$2.75. 
C)$2.50. 
D)$.40.

Quizplus · Accepted Answer

To calculate the per unit cost of production, we need to divide the total cost of inputs by the total output.

Total cost of inputs: 
3 x 5 (for labor) + 2 x 5 (for capital) + 4 x 5 (for energy) = 15 + 10 + 20 = $45

Total output: 
200

Per unit cost of production: 
45/200 = $0.225 or $2.25

Therefore, the per unit cost of production in this economy is $2.50 (rounded to the nearest cent).

The Following Table Gives Information About the Relationship Between Input