-The table above gives a firm's total product schedule. Suppose labor is the only variable factor of production. The price of labor is $500 per week and total fixed costs are $600 per week. If 95 units are produced, the average total cost is
A) $6.31.
B) $17.45.
C) $26.32.
D) $32.63.

Question

-The table above gives a firm's total product schedule. Suppose labor is the only variable factor of production. The price of labor is $500 per week and total fixed costs are $600 per week. If 95 units are produced, the average total cost is
A) $6.31. 
B) $17.45. 
C) $26.32. 
D) $32.63.

Quizplus · Accepted Answer

To find the average total cost (ATC), we need to calculate the total cost (TC) and divide it by the quantity produced. The total cost is the sum of total fixed costs (TFC) and total variable costs (TVC). If 95 units are produced, we need to determine how many units of labor are used to produce 95 units, multiply that by the price of labor ($500), and add the fixed costs ($600). Then, divide the total cost by 95 to find the ATC. The correct calculation leads to an ATC of $32.63.

-The Table Above Gives a Firm's Total Product Schedule