Question

In Problem 22-20, if the firm were to employ the 8th unit of labour and produce 380 units of output, what would be the average variable cost and the marginal cost?

Short answer

the average variable cost is $21.5$and the marginal cost is$50$.

Step-by-step solution

Given Information

The firm was to employ the $8th$unit of labour and

The units of output produced$380$.

Explanation

Using the formula,

TVC = $1000$

Output Q =$47.5$

$\text{Average variable cost}=\frac{\text{Total variablecost}}{\text{outputproduced}}$

$=\frac{1000}{47.5}=21.05$

Using,

$\text{Marginal cost}=\frac{\text{change in totalcost}}{\text{change in total quantity}}.$

$=\frac{1000}{20}=50$