Assume that one laborer produces 6 units of output,two laborers produce 14 units,three produce 20 units,and four produce 24 units.If the cost is $20 per unit of labor and fixed costs are $100,what is the average total cost at 14 units of output?
A)$50
B)$20
C)$10
D)$100
E)$40

Question

Quizplus · Accepted Answer

To find the average total cost at 14 units of output, we need to first find the total cost and then divide it by the total output. We know that four laborers produce 24 units of output, which means each laborer produces 6 units. Therefore, we need four laborers to produce 14 units + 10 units = 24 units.

Cost of four laborers = 4 * $20 = $80
Fixed costs = $100
Total cost = $80 + $100 = $180

Average total cost = Total cost / Total output = $180 / 14 units = $12.86

Therefore, the best choice is C, as it is the closest to the calculated average total cost of $12.86.

Assume That One Laborer Produces 6 Units of Output,two Laborers