Question
A firm currently uses 40,000 workers to produce 180,000 units of output per day.
Assume the following:
the daily wage per worker is $100
the cost of other variable inputs is $500,000 per day
the price of the firm's output is $28
the firm’s output is constant at the level of 180,000 units per day
total fixed cost equals $1,200,000
A firm currently uses 40,000 workers to produce 180,000 units of output per day.
Assume the following:
the daily wage per worker is $100
the cost of other variable inputs is $500,000 per day
the price of the firm's output is $28
the firm’s output is constant at the level of 180,000 units per day
total fixed cost equals $1,200,000
STEP 2: Based on the information in Step 1, calculate the following. Use the formulas provided, and show ALL work (5 points)
Total Variable Cost = (Number of Workers x Worker's Daily Wage) + Other Variable Costs (5 points)
Total Costs = Total Variable Costs + Total Fixed Costs (5 points)
Assume the following:
the daily wage per worker is $100
the cost of other variable inputs is $500,000 per day
the price of the firm's output is $28
the firm’s output is constant at the level of 180,000 units per day
total fixed cost equals $1,200,000
A firm currently uses 40,000 workers to produce 180,000 units of output per day.
Assume the following:
the daily wage per worker is $100
the cost of other variable inputs is $500,000 per day
the price of the firm's output is $28
the firm’s output is constant at the level of 180,000 units per day
total fixed cost equals $1,200,000
STEP 2: Based on the information in Step 1, calculate the following. Use the formulas provided, and show ALL work (5 points)
Total Variable Cost = (Number of Workers x Worker's Daily Wage) + Other Variable Costs (5 points)
Total Costs = Total Variable Costs + Total Fixed Costs (5 points)
Answers
Answered by
GPT-4o mini
To calculate the required values based on the provided information, we can follow the formulas given step by step.
### Step 1: Calculate Total Variable Cost
**Total Variable Cost (TVC)** is composed of the cost of labor (number of workers multiplied by daily wage per worker) and other variable costs. The formula is:
\[
\text{Total Variable Cost} = (\text{Number of Workers} \times \text{Worker's Daily Wage}) + \text{Other Variable Costs}
\]
#### Given Data:
- Number of Workers = 40,000
- Worker's Daily Wage = $100
- Other Variable Costs = $500,000
Now, let's plug in the values:
\[
\text{Total Variable Cost} = (40,000 \times 100) + 500,000
\]
Calculating the labor cost:
\[
40,000 \times 100 = 4,000,000
\]
Now add the other variable costs:
\[
\text{Total Variable Cost} = 4,000,000 + 500,000 = 4,500,000
\]
### Step 2: Calculate Total Costs
**Total Costs (TC)** is the sum of total variable costs and total fixed costs. The formula is:
\[
\text{Total Costs} = \text{Total Variable Costs} + \text{Total Fixed Costs}
\]
#### Given Data:
- Total Fixed Costs = $1,200,000
- Total Variable Costs (calculated above) = $4,500,000
Now, plug in the values:
\[
\text{Total Costs} = 4,500,000 + 1,200,000
\]
Calculating the total costs:
\[
\text{Total Costs} = 4,500,000 + 1,200,000 = 5,700,000
\]
### Summary of Results:
1. **Total Variable Cost** = $4,500,000
2. **Total Costs** = $5,700,000
These calculations outline all the work based on the provided formulas and information.
### Step 1: Calculate Total Variable Cost
**Total Variable Cost (TVC)** is composed of the cost of labor (number of workers multiplied by daily wage per worker) and other variable costs. The formula is:
\[
\text{Total Variable Cost} = (\text{Number of Workers} \times \text{Worker's Daily Wage}) + \text{Other Variable Costs}
\]
#### Given Data:
- Number of Workers = 40,000
- Worker's Daily Wage = $100
- Other Variable Costs = $500,000
Now, let's plug in the values:
\[
\text{Total Variable Cost} = (40,000 \times 100) + 500,000
\]
Calculating the labor cost:
\[
40,000 \times 100 = 4,000,000
\]
Now add the other variable costs:
\[
\text{Total Variable Cost} = 4,000,000 + 500,000 = 4,500,000
\]
### Step 2: Calculate Total Costs
**Total Costs (TC)** is the sum of total variable costs and total fixed costs. The formula is:
\[
\text{Total Costs} = \text{Total Variable Costs} + \text{Total Fixed Costs}
\]
#### Given Data:
- Total Fixed Costs = $1,200,000
- Total Variable Costs (calculated above) = $4,500,000
Now, plug in the values:
\[
\text{Total Costs} = 4,500,000 + 1,200,000
\]
Calculating the total costs:
\[
\text{Total Costs} = 4,500,000 + 1,200,000 = 5,700,000
\]
### Summary of Results:
1. **Total Variable Cost** = $4,500,000
2. **Total Costs** = $5,700,000
These calculations outline all the work based on the provided formulas and information.