ABC is operating at an average product of 1000 units. It is considering employing an additional worker who will produce an additional 900 units. (a) What will be the effect on the ABC’s average product when this worker is taken on?  (b) Assuming the price of the product is K2 per unit, should the worker be taken on if his wage is K1700

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Cost of Production

In economic theory, production costs are the costs incurred by an industrial organization when it engineers a project or provides a service that generates revenue and benefits. Labor costs, raw materials, consumable manufacturing costs, and general overhead sum up, accounting for production costs. Total cost data is calculated by combining total direct costs of materials, labor costs, and total production costs.