An economy is employing 2 units of capital, 5 units of raw materials, and 8 units of labor to produce its total output of 640 units. Each unit of capital costs $10; each unit of raw materials, $4; and each
Unit of labor, $3. The per-unit cost of production in this economy is

Question

Quizplus · Accepted Answer

Total cost of production = (2 x $10) + (5 x $4) + (8 x $3) = $20 + $20 + $24 = $64
Per-unit cost of production = Total cost of production / Total output = $64 / 640 = $0.10.

An Economy Is Employing 2 Units of Capital, 5 Units