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What is the firm's average fixed cost of producing 1,500 gadgets?

What is the firm's average fixed cost of producing 1,500 gadgets?

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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If the Marginal Product of Labor(MPL) for the 2nd worker is 500 units.  What is the firms average Fixed Cost (FC) of producing 1,500 gadgets?

The image presents a table titled "L (workers)" versus various cost metrics and production outputs. The columns are as follows: 1. **L (workers)**: Number of workers, ranging from 0 to 7. 2. **Q (units)**: Quantity of units produced. - 0 workers produce 0 units. - 1 worker produces 400 units. - 2 workers produce 900 units. - 3 workers produce 1,500 units. - 4 workers produce 1,950 units. - 5 workers produce 2,300 units. - 6 workers produce 2,600 units. - 7 workers produce 2,850 units. 3. **MPL (units)**: Marginal Product of Labor (not filled out here). 4. **FC ($)**: Fixed Costs (not filled out here). 5. **VC ($)**: Variable Costs (not filled out here). 6. **TC ($)**: Total Costs (not filled out here). 7. **AFC ($)**: Average Fixed Costs (not filled out here). 8. **AVC ($)**: Average Variable Costs (not filled out here). 9. **ATC ($)**: Average Total Costs (not filled out here). 10. **MC ($)**: Marginal Costs (not filled out here). Below the table, there's a multiple-choice question: "What is the firm's average fixed cost of producing 1,500 gadgets?" Options: - $0.45 - $1.33 - $2.00 - None of the above
Transcribed Image Text:The image presents a table titled "L (workers)" versus various cost metrics and production outputs. The columns are as follows: 1. **L (workers)**: Number of workers, ranging from 0 to 7. 2. **Q (units)**: Quantity of units produced. - 0 workers produce 0 units. - 1 worker produces 400 units. - 2 workers produce 900 units. - 3 workers produce 1,500 units. - 4 workers produce 1,950 units. - 5 workers produce 2,300 units. - 6 workers produce 2,600 units. - 7 workers produce 2,850 units. 3. **MPL (units)**: Marginal Product of Labor (not filled out here). 4. **FC ($)**: Fixed Costs (not filled out here). 5. **VC ($)**: Variable Costs (not filled out here). 6. **TC ($)**: Total Costs (not filled out here). 7. **AFC ($)**: Average Fixed Costs (not filled out here). 8. **AVC ($)**: Average Variable Costs (not filled out here). 9. **ATC ($)**: Average Total Costs (not filled out here). 10. **MC ($)**: Marginal Costs (not filled out here). Below the table, there's a multiple-choice question: "What is the firm's average fixed cost of producing 1,500 gadgets?" Options: - $0.45 - $1.33 - $2.00 - None of the above
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Fixed cost refers to the cost incurred by a firm irrespective of the level of output produced by a firm.

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