Assume it takes 10 units of labor to produce 4 units of output. When the price of labor is $6 per unit and fixed costs equal $60, what is the total cost of those 4 units of output?
A) $60
B) $70
C) $120
D) $84

Question

Quizplus · Accepted Answer

The total cost includes both variable and fixed costs. Variable cost is calculated as the price of labor per unit multiplied by the number of labor units needed. Here, 10 units of labor at $6 each equals $60. Adding the fixed cost of $60 gives a total cost of $120.

Assume It Takes 10 Units of Labor to Produce 4