Use the table to answer the question.

Question

Number of Workers Output Total Cost Variable Cost Fixed Cost
5 100 $130
$80
$50
10 180 $210
$160
$50
15 240 $290
$240
$50
20 280 $370
$320
$50
If the cost of labor is the only variable cost that the firm faces, what is the cost incurred by the business for each additional unit of labor?

(1 point)
Responses

$16
16 dollars

$50
50 dollars

$80
80 dollars

$10
10 dollars
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Answer 1

To find the cost incurred by the business for each additional unit of labor, we need to look at the variable cost associated with each additional worker. The variable cost represents the cost that changes with the level of output and, here, it is solely from the labor.

From the table, let's examine how the variable cost changes with the addition of workers:

1. From 5 to 10 workers:

   • Variable Cost at 5 workers = $80
   • Variable Cost at 10 workers = $160
   • Increase in Variable Cost = $160 - $80 = $80
   • Number of additional workers = 10 - 5 = 5
   • Cost per additional worker = $80 / 5 = $16

2. From 10 to 15 workers:

   • Variable Cost at 10 workers = $160
   • Variable Cost at 15 workers = $240
   • Increase in Variable Cost = $240 - $160 = $80
   • Number of additional workers = 15 - 10 = 5
   • Cost per additional worker = $80 / 5 = $16

3. From 15 to 20 workers:

   • Variable Cost at 15 workers = $240
   • Variable Cost at 20 workers = $320
   • Increase in Variable Cost = $320 - $240 = $80
   • Number of additional workers = 20 - 15 = 5
   • Cost per additional worker = $80 / 5 = $16

In every case, the cost incurred by the business for each additional unit of labor is consistent.

Thus, the cost incurred by the business for each additional unit of labor is $16.