Question
Asked Nov 17, 2019
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if a firm hire workers at $3 week , labour is 1 and output is 6 what is the fixed cost, variable cost, total cost, AVC, ATC and MC.

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Expert Answer

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Step 1

Wages (W) is given as $3.

Labor (L) is 1.

Output (Q) is 6 units.

Step 2

There is no fixed cost given. Labor cost is the variable cost.

Hence, fixed cost (FC) = 0

Also, variable cost (VC) = wages × labor

VC = $3 × 1 = 3

Now, total cost is the addition of fixed cost and variable cost.

TC = FC + VC

      = 3 + 0

      = 3

Hence, TC = 3

AVC is the per unit variable cost of output.

VC
AVC=
6
0.5
II
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VC AVC= 6 0.5 II

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Step 3

ATC is the per unit cost o...

ТC
АТС-
о
6
=0.5
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ТC АТС- о 6 =0.5

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