Refer to the following:

Suppose a firm is hiring 20 workers at a wage rate of $60. The average product of labor is 30, the last worker added 12 units of output, and total fixed cost is $3,600.

-What is average total cost?
A) $2
B) $8
C) $600
D) $1800
E) none of the above

Question

Refer to the following:

Suppose a firm is hiring 20 workers at a wage rate of $60.  The average product of labor is 30, the last worker added 12 units of output, and total fixed cost is $3,600.

-What is average total cost?
A) $2
B) $8
C) $600
D) $1800
E) none of the above

Quizplus · Accepted Answer

The average total cost cannot be as low as $2 or $600 as this would mean that the company is producing at an extremely low cost or operating at a loss. $1800 also seems too high for an average total cost, thus leaving option B, $8, as the most plausible choice.

Refer to the Following