Suppose a firm uses workers and office space to produce output. The firm is locked into a year-long lease on its office space, but it can easily vary the number of employee-hours it uses each day. The accompanying table describes the relationship between the number of employee-hours the firm uses each day and the firm's daily output. Each unit of output sells for $2, the hourly wage rate is $14, and the rent on the office space is $50 per day.
When the firm uses 9 employee-hours per day, its total cost each day is:

Question

Suppose a firm uses workers and office space to produce output. The firm is locked into a year-long lease on its office space, but it can easily vary the number of employee-hours it uses each day. The accompanying table describes the relationship between the number of employee-hours the firm uses each day and the firm's daily output. Each unit of output sells for $2, the hourly wage rate is $14, and the rent on the office space is $50 per day.   
When the firm uses 9 employee-hours per day, its total cost each day is:

Quizplus · Accepted Answer

9 × $14 = $126 in labor costs plus $50 in rent for a total cost of $176.

Suppose a Firm Uses Workers and Office Space to Produce