# Answer to Question #5502 in Microeconomics for Bessie Allen

Question #5502
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 for the firm produces 90 units of output. fixed costs 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 average total cost of production when teh firm hires 7 workers. \$10.06,\$9.64,.81, .70
1
2012-11-06T07:31:39-0500
ATC (average total cost) = TC (total cost) / Q (total output)

TC = FC (fixed costs) + VC (variable costs)

FC = \$6 (from condition)

VC = 7 (workers) * \$10 (variable cost per unit of labor) = \$70

TC = \$6 + \$70 = \$76

Q = 90 (if there are 6 workers) + 4 (marginal product of 7th worker) = 94

ATC = \$76 / 94 = 0.81 USD per unit of output

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Assignment Expert
06.11.12, 14:32

Thanks for correcting us!

correction
05.11.12, 20:54

76/94=.808