Question

Suppose that a firm has only one variable input, labor, and firm output is zero when...

Suppose that a firm has only one variable input, labor, and firm output is zero when labor is zero. When the firm hires 6 workers it produces 90 units of output. Fixed cost of production are $6 and the variable cost per unit of labor is $10. The marginal product of the seventh unit of labor is 4. Given this information, what is the total cost of production when the firm hires 7 workers? (Show your work)

Homework Answers

Answer #1

Amount of output produced when it hire 6 workers = 90 and Marginal Product of 7th worker = 4. Hence Total output produced when It hires 7 workers = 90 + 4 = 94 units.

Total Cost = Fixed Cost + Variable Cost

Given Fixed Cost = $6

Here Variable Cost = wage rate * Amount of Labor Hired = 10*L

As we have to find cost of production when 7 unit of labor is hired means we have L = 7 => Variable Cost = 70.

Hence Total Cost = 6 + 70 = $76

Hence, the total cost of production when the firm hires 7 workers is $76

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
If labor is the only variable input of a firm and the marginal product of labor...
If labor is the only variable input of a firm and the marginal product of labor is falling, the firm will always product A. more than the profit-maximizing level of output B. less than the profit-maximizing level of output C. at a level of output where average total cost is at a minimum D. at a level of output where marginal costs are rising E. at a level of output where average variable costs are falling I know the right...
8. Say the production of a product requires one variable input along with a fixed input....
8. Say the production of a product requires one variable input along with a fixed input. The total product of the units of the variable input from 0 to 9 are, respectively, 0, 5, 20, 32, 42, 50, 55, 58, 58, and 56. Marginal product is largest for the: A. Second unit of variable input B. Third unit of variable input C. Seventh unit of variable input D. Ninth unit of variable input 9. Say the production of a product...
Answer the following and state your reasoning. (1) Economists normally assume that the goal of a...
Answer the following and state your reasoning. (1) Economists normally assume that the goal of a firm is to (i) sell as much of its product as possible. (ii) set the price of the product as high as possible. (iii) maximize profit. a. (i) and (ii) only b. (ii) and (iii) only c. (iii) only d. (i), (ii), and (iii) (2) Suppose that for a particular firm the only variable input into the production process is labor and that output...
Suppose your business is currently employing 750 workers, the only variable input, at a wage rate...
Suppose your business is currently employing 750 workers, the only variable input, at a wage rate of $48. The average product of labour is 96, the last worker added 6 units to total output and total fixed cost is $12000. Queation a. What is the marginal cost? b. What is the average variable cost? c. How much output is being produced? d. What is the average total cost? e. Is average variable cost increasing or decreasing? What about average total...
suppose that a firm's only variable cost is labor. when 100 workers are used, the average...
suppose that a firm's only variable cost is labor. when 100 workers are used, the average product of labor is 60, and the marginal product of the 100th worker is 50. the wage rate is $25 and the total fixed cost is $1000. (show all calculations) A) what is the average variable cost? B) what is the marginal cost? C) what is the average total cost? D) The following are either true or false. indicate which is correct and explain....
Consider a firm that produces a single output with a single input, labor, using production function...
Consider a firm that produces a single output with a single input, labor, using production function F(L)=100L−4(L^2), for L∈[0,12.5]. The input price is W=2. 1. Determine the firm’s cost function C(Q), that is, the lowest cost of producing Q units of output. State the associated labor choice for a given required output, L(Q). Consider only the range Q ∈ [0, 12.5] . 2. What is the firm’s marginal cost curve, MC(Q)?
Suppose you are given the following information:             Price of variable input is $40/unit; Price of...
Suppose you are given the following information:             Price of variable input is $40/unit; Price of fixed input is $50/unit a. Using the above information, complete the followingtable Units of Fixed Input Units of Variable Input Output Marginal Product TFC TVC AFC AVC ATC MC 2 0 0 2 1 10 2 2 25 2 3 45 2 2 2 2 4 5 6 7 8 70 100 125 140 150 b. Draw graphs for AFC, AVC, ATC, and MC....
Suppose when a firm hires more workers, it does not get as much extra output from...
Suppose when a firm hires more workers, it does not get as much extra output from those workers as it did. This is an example of what? Diminishing marginal capital. Diminishing Marginal Product. Diminishing average product. Diminishing variable cost. Using the information of the last question, how would the introduction of UBER, a ride share firm, affect the equilibrium? It wouldn't since the medallions are in fixed supply. It would cause demand to rise putting upward pressure on price. It...
1?Basic factors of production available to a society are * A. natural resources, labor and capital....
1?Basic factors of production available to a society are * A. natural resources, labor and capital. * B. natural resources, labor and money. * C. labor, money and environment. * D. natural resources, money and infrastructure. 2?Total cost is * A. the sum of total fixed cost and total variable cost. * B. increasing with output. * C. equal to total fixed cost when production level is zero. * D. all the above true. 3?Suppose a certain firm is able...
In the​ short-run, we assume that capital is a fixed input and labor is a variable​...
In the​ short-run, we assume that capital is a fixed input and labor is a variable​ input, so the firm can increase output only by increasing the amount of labor it uses. In the​ short-run, the​ firm's production function is q = f(L, K)​, where q is​ output, L is​ workers, and K is the fixed number of units of capital. A specific equation for the production function is given​ by: q = 8LK + 5L2 − 13L3 or​ ,...