Refer to the following:
The following graph shows the marginal and average product curves for labor, the firm's only variable input. The monthly wage for labor is $2,800. Fixed cost is $160,000.

-When the firm uses 40 units of labor, how much output does it produce?
A) 1,600 units
B) 400 units
C) 4,000 units
D) 2,800 units
E) none of the above

Question

Refer to the following:
The following graph shows the marginal and average product curves for labor, the firm's only variable input. The monthly wage for labor is $2,800. Fixed cost is $160,000.
 
-When the firm uses 40 units of labor, how much output does it produce?
A) 1,600 units 
B) 400 units 
C) 4,000 units 
D) 2,800 units 
E) none of the above

Quizplus · Accepted Answer

When the firm uses 40 units of labor, it produces 1,600 units of output. This is because the production function is Q = 40L, so when L = 40, Q = 1,600.

Refer to the Following