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 variable cost of producing 2,600 gadgets?a$1,000b$1,750c$2,000dnone of the above AVC ($)(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

Answer to the question is as follows :Given , EXPLANATION : Fixed Costs = $2000/day wage rate = $250/day From the table given , we can see that to produce 2600 gadgets , 6 units of labor is employed along with the fixed factors of production . Therefore , since labor is the variable factor so the cost incurred on labor is the variable cost of production . Variable cost of producing 2600 gadgets = Labor cost incurred in producing 2600 gadgets = Labor units x wage rate = 6 x $250 =$1500 Hence , the correct option is d .

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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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 variable cost of producing 2,600 gadgets?

a	$1,000
b	$1,750
c	$2,000
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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