Suppose that real domestic output in an economy is 20 units, the quantity of inputs is 10, and the price of each input is $4. The per-unit cost of production in the economy described is
A) $0.50.
B) $1.
C) $2.
D) $5.

Question

Quizplus · Accepted Answer

Per-unit cost of production can be calculated by dividing the total cost of inputs by the level of output. 
Total cost of inputs = Price of each input x Quantity of inputs = $4 x 10 = $40 
Per-unit cost of production = Total cost of inputs / Real domestic output = $40 / 20 units = $2 per unit.

Suppose That Real Domestic Output in an Economy Is 20