11. Consider the following table illustrating the production function of gadgets. Furthermore, suppose the firm has fixed costs of $2,000/day and the wage rate is $250/day.What is the firm's total cost of producing 2,600 gadgets?a$2,000b$2,500c$3,500dnone of the above AVC ($)(VarialbeTC ($) (Fixed AFC ($)(FixedCost+Varialb Cost/Quantit Cost/Quantit cost/quantite Cost)ATC ($) (totalQMPL(workers)(Units)(Units)FC ($)VC ($)v)v)MC ($)200014004002000290050020002.22150060020001.334195045020001.035.230035020000.87260030020000.777285025020000.70

Total cost can be calculated by using the following formula.To produce 2,600 units of gadget, it requires 6 units of labor. The total cost to produce 2,600 units can be calculated by substituting the respective values in Equation (1). Total cost for producing 2,600 units gadget is $3,500. Thus, option ‘c’ is correct. Since the values mentioned in option ‘a’ and ‘b’ are not equal to the calculated value $3,500, these options are in correct. Since option ‘c’ is correct, option ‘d’ is incorrect.

Answered: Consider the following table…

ENGR.ECONOMIC ANALYSIS

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ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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11. Consider the following table illustrating the production function of gadgets. Furthermore, suppose the firm has fixed costs of $2,000/day and the wage rate is $250/day.

What is the firm's total cost of producing 2,600 gadgets?

a	$2,000
b	$2,500
c	$3,500
d	none of the above

AVC ($)
(Varialbe
TC ($) (Fixed AFC ($)(Fixed
Cost+Varialb Cost/Quantit Cost/Quantit cost/quantit
e Cost)
ATC ($) (total
Q
MPL
(workers)
(Units)
(Units)
FC ($)
VC ($)
v)
v)
MC ($)
2000
1
400
400
2000
2
900
500
2000
2.22
1500
600
2000
1.33
4
1950
450
2000
1.03
5.
2300
350
2000
0.87
2600
300
2000
0.77
7
2850
250
2000
0.70

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