Question
Suppose that a company currently employs 1 comma 000
workers and produces 4
million units of output per month. Labor is its only variable input, and the company pays each worker the same monthly wage. The company's current total variable costs equal $2
million.
Part 2
What are average variable costs at this firm's current output level?
workers and produces 4
million units of output per month. Labor is its only variable input, and the company pays each worker the same monthly wage. The company's current total variable costs equal $2
million.
Part 2
What are average variable costs at this firm's current output level?
Answers
GPT 3.5
To find the average variable cost at the current output level, we divide the total variable costs by the number of units produced.
Average Variable Cost = Total Variable Costs / Output Quantity
In this case, the total variable costs are $2 million and the output quantity is 4 million units.
Average Variable Cost = $2 million / 4 million units = $0.50 per unit
Therefore, the average variable costs at this firm's current output level are $0.50 per unit.
Average Variable Cost = Total Variable Costs / Output Quantity
In this case, the total variable costs are $2 million and the output quantity is 4 million units.
Average Variable Cost = $2 million / 4 million units = $0.50 per unit
Therefore, the average variable costs at this firm's current output level are $0.50 per unit.