Refer to the following:
The price of capital is $100 per unit; the price of labor is $25 per unit.
-When output is 20 units, what is AVERAGE cost?
A) $350
B) $700
C) $3,500
D) $7,000
E) none of the above

Question

Refer to the following:
  The price of capital is $100 per unit; the price of labor is $25 per unit.
-When output is 20 units, what is AVERAGE cost?
A) $350 
B) $700 
C) $3,500 
D) $7,000 
E) none of the above

Quizplus · Accepted Answer

Average cost = Total cost / Total outputTotal cost = $7,000Total output = 20 unitsAverage cost = $7,000 / 20 units = $350

Refer to the Following