Construct the average fixed cost, average variable cost, and average total cost schedules and the marginal cost schedule. Len's body board factory pays $60 a day for equipment and $200 a day to each worker it hires. The table sets out Len's total product schedule.| Labor (workers per day) | Total product (body boards per day) ||-------------------------|-------------------------------------|| 0 | 0 || 1 | 20 || 2 | 44 || 3 | 60 || 4 | 72 |**Explanation of the Table:**- The first column, "Labor (workers per day)," indicates the number of workers hired each day.- The second column, "Total product (body boards per day)," shows the number of body boards produced per day based on the number of workers.This table demonstrates the relationship between the number of workers and the output of the factory. Initially, as more workers are hired, production increases significantly. However, the rate of increase in production may diminish as more workers are added.

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Construct the average fixed cost, average variable cost, and average total cost schedules and the marginal cost schedule.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Construct the average fixed cost, average variable cost, and average total cost schedules and the marginal cost schedule.

Len's body board factory pays $60 a day for equipment and $200 a day to each worker it hires. The table sets out Len's total product schedule.

| Labor (workers per day) | Total product (body boards per day) |
|-------------------------|-------------------------------------|
| 0 | 0 |
| 1 | 20 |
| 2 | 44 |
| 3 | 60 |
| 4 | 72 |

**Explanation of the Table:**

- The first column, "Labor (workers per day)," indicates the number of workers hired each day.
- The second column, "Total product (body boards per day)," shows the number of body boards produced per day based on the number of workers.

This table demonstrates the relationship between the number of workers and the output of the factory. Initially, as more workers are hired, production increases significantly. However, the rate of increase in production may diminish as more workers are added.

Definition Definition Measure of the cost of production per unit of output, including only variable costs such as wages, materials, and utilities. AVC is calculated by dividing total variable cost by the number of units produced. Understanding average variable cost is important for businesses to make decisions on pricing, production levels, and profitability.

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