If the Marginal Product of Labor(MPL) for the 2nd worker is 500 units. What is the firms average Fixed Cost (FC) of producing 1,500 gadgets? LQ(units)MPLVCAFCAVCATCMC(workers)(units) FC ($)($)TC ($)($)($)($)(S)1400290031,5001,950452,3002,6002,8507What is the firm's average fixed cost of producing 1,500 gadgets?$0.45$1.33$2.00O none of the above

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Economics

What is the firm's average fixed cost of producing 1,500 gadgets?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Concept explainers

Isocost and Isoprofit Curve Analysis

An isocost curve in the production theory that is a crucial part of economics depicts different combinations of factor inputs at a given market cost. In other words, this shows all the combinations of production factors that cost the same for the firm to employ. Usually, this can be depicted as a downward sloping straight line when the firms act as the price-takers in the factor markets. The slope of this mainly depicts the relative prices of different production factors.

Question

If the Marginal Product of Labor(MPL) for the 2nd worker is 500 units. What is the firms average Fixed Cost (FC) of producing 1,500 gadgets?

L
Q
(units)
MPL
VC
AFC
AVC
ATC
MC
(workers)
(units) FC ($)
($)
TC ($)
($)
($)
($)
(S)
1
400
2
900
3
1,500
1,950
4
5
2,300
2,600
2,850
7
What is the firm's average fixed cost of producing 1,500 gadgets?
$0.45
$1.33
$2.00
O none of the above

Expert Solution

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Fixed cost refers to the cost incurred by a firm irrespective of the level of output produced by a firm.

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