Answered: The same firm produces 500 lawnmowers…

The same firm produces 500 lawnmowers per week. It hires 20 full-time workers (40 hours/week) at an hourly wage of $15. Raw materials are ordered weekly and they costs $50 for every unit

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter4: Extent (how Much) Decisions

Section: Chapter Questions

Problem 10MC

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Question

The same firm produces 500 lawnmowers per week. It hires 20 full-time workers (40 hours/week) at an hourly wage of $15. Raw materials are ordered weekly and they costs $50 for every unit produced. The weekly cost of the rent payment for the factory is $2,250. Lawnmowers sell for $100. What is the average total cost and the profit margin?

A. $58.50 and 17.7%.

B. $58.50 and 27.4%.

C. $78.50 and 21.5%.

D. $58.50 and 41.5%.

E. $78.50 and 27.4%.

Definition Definition Total cost of producing a certain quantity of a good, divided by the quantity produced. It is the sum of all costs (fixed and variable) required to produce one unit of output.

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