Question

suppose that an economy produces 500 units of output. it takes 10 units of labor at $15 a unit and 7 units of capital at $50 a unit to produce this amount of output. the per unit cost of production is

Answer 1

The per unit cost of production is the total cost of producing one unit of output. To calculate the per unit cost of production, we need to add up all of the costs of producing the 500 units of output and then divide by the number of units produced.

The cost of labor is:

10 units of labor * $15/unit = $150

The cost of capital is:

7 units of capital * $50/unit = $350

The total cost of producing 500 units of output is:

$150 + $350 = $500

So the per unit cost of production is:

$500 / 500 units = $1/unit