Suppose that a firm is currently employing 20 workers, the only variable input, at a wage rate of $250. The average physical product of labor is 25, the last worker added 10 units to total output, and total fixed cost is $5,000. a. What is marginal cost? b. What is average variable cost? c. What is the average total cost? d. At the current output rate, is average variable cost increasing, constant, or decreasing? Is average total cost increasing, constant, or decreasing?
Suppose that a firm is currently employing 20 workers, the only variable input, at a wage rate of $250. The
average physical product of labor is 25, the last worker added 10 units to total output, and total fixed cost is $5,000.
| a. What is marginal cost? |
| b. What is average variable cost? |
| c. What is the average total cost? |
| d. At the current output rate, is average variable cost increasing, constant, or decreasing? Is average total cost increasing, constant, or decreasing? |
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