Assume fixed costs are 470 and labor costs $20 per unit. The first laborer produces 20 units of output. Subsequent hires add 5 units less to production than the previous worker. Thus the second worker adds 15, the third adds 10 etc. Which of the following is a true statement?

Question

Quizplus · Accepted Answer

The average total cost (ATC) at an output of 50 units can be calculated by adding fixed costs to variable costs (labor costs) and then dividing by the total output. With fixed costs at 470 and labor costs at $20 per unit, the calculation for ATC at an output of 50 involves finding the total cost first. The first laborer produces 20 units at $20 each, the second produces 15 more units, and the third produces 10 more units, totaling 45 units. To reach 50 units, part of the calculation involves additional labor cost for the next 5 units, but the key point is understanding how ATC behaves with given costs and output. The statement about ATC being 11 at an output of 50 is a conceptual understanding of how costs behave with production changes, considering the fixed and variable costs provided.

Assume Fixed Costs Are 470 and Labor Costs $20 Per