-Assume labor-the only variable input of a firm-has average and marginal product curves shown in the figure above.The price of labor is $1,000 per unit .At its minimum value,average variable cost is $__________.
A)$1,000/2,025
B)$1,000/1,925
C)$1,000/1,800
D)$1,000/825
E)none of the above

Question

-Assume labor-the only variable input of a firm-has average and marginal product curves shown in the figure above.The price of labor is $1,000 per unit .At its minimum value,average variable cost is $__________.
A)$1,000/2,025 
B)$1,000/1,925 
C)$1,000/1,800 
D)$1,000/825 
E)none of the above

Quizplus · Accepted Answer

At the minimum value of average variable cost (AVC), AVC is equal to the wage rate divided by the maximum average product of labor. If the maximum average product is 2,025, then AVC is $1,000/2,025.

-Assume Labor-The Only Variable Input of a Firm-Has Average and Marginal