Refer to the information provided in Table 8.4 below to answer the question(s) that follow.
Table 8.4
$$\begin{array} { c c c c }
\hline \text { Produce } & \text { Using Techniques } & \text { Units of Variable K } & \text { Inputs L } \
\hline 1 \text { unit of output } & \text { A } & 4 & 4 \
\hline & \text { B } & 2 & 6 \
\hline 2 \text { units of output } & & & \
\hline & \text { A } & 7 & 6 \
\hline& \text { B } & 4 & 10 \
\hline 3 \text { units of output } &\text { A } &8 & 6 \
\hline &\text { B } & 6& 11 \
\hline
\end{array}$$
-Refer to Table 8.4. Assume that the relevant time period is the short run. Assuming the price of labor (L) is $5 per unit and the price of capital (K) is $10 per unit, the average total cost of producing two units of output is
A) $10.
B) $20.
C) $45.
D) $50.

Question

Refer to the information provided in Table 8.4 below to answer the question(s) that follow.
Table 8.4
 $$\begin{array} { c c c c } 
\hline \text { Produce } & \text { Using Techniques } & \text { Units of Variable K } & \text { Inputs L } \
\hline 1 \text { unit of output } & \text { A } & 4 & 4 \
\hline & \text { B } & 2 & 6 \
\hline 2 \text { units of output } & & & \
\hline & \text { A } & 7 & 6 \
\hline& \text { B } & 4 & 10 \
\hline 3 \text { units of output } &\text { A }  &8 & 6 \
\hline &\text { B } & 6& 11 \
\hline
\end{array}$$
-Refer to Table 8.4. Assume that the relevant time period is the short run. Assuming the price of labor (L) is $5 per unit and the price of capital (K) is $10 per unit, the average total cost of producing two units of output is
A) $10.
B) $20.
C) $45.
D) $50.

Quizplus · Accepted Answer

To calculate the average total cost (ATC) of producing two units of output, we first need to determine the total cost (TC) of production for each technique (A and B), and then divide by the quantity of output produced (which is 2 units in this case). The total cost of production is calculated by adding the cost of labor (L) and the cost of capital (K). Given that the price of labor (L) is $5 per unit and the price of capital (K) is $10 per unit, we calculate as follows:For Technique A:- Units of Variable K for 2 units of output = 7, so the cost of K = 7 * $10 = $70.- Inputs L for 2 units of output = 6, so the cost of L = 6 * $5 = $30.- Total cost (TC) for Technique A = $70 + $30 = $100.For Technique B:- Units of Variable K for 2 units of output = 4, so the cost of K = 4 * $10 = $40.- Inputs L for 2 units of output = 10, so the cost of L = 10 * $5 = $50.- Total cost (TC) for Technique B = $40 + $50 = $90.Since we are looking for the average total cost (ATC) for producing 2 units of output, and Technique B offers the lower total cost, we use the total cost from Technique B for our calculation:- ATC = Total Cost / Quantity of Output = $90 / 2 = $45.Therefore, the average total cost of producing two units of output is $45.

Refer to the Information Provided in Table 8 -Refer to Table 8