Final answer:
To calculate the amount of labor used to produce 1,000 units of output per week, subtract the fixed cost from the total cost to get the variable cost, then divide by the wage rate. In this case, it requires 10 units of labor at a weekly wage of $1,600 to produce the 1,000 units.
Step-by-step explanation:
The student is asking about calculating the quantity of labor used in the production of goods, given certain financial information. In this scenario, the student has provided information about fixed costs, total costs, and the wage rate. To find the amount of labor used to produce 1,000 units of output, we must first determine the total variable costs and then use the wage rate to find the quantity of labor.
Fixed costs remain constant regardless of the level of production. In this case, the fixed cost is $12,500 per week. The total cost of producing 1,000 units is $28,500 per week. The difference between total cost and fixed cost gives us the total variable cost, which is solely attributed to labor in this example. Given that the weekly wage is $1,600, we can calculate the amount of labor by dividing the total variable cost by the weekly wage.
To solve the problem:
• Determine the total variable cost: $28,500 (total cost) - $12,500 (fixed cost) = $16,000
• Calculate the amount of labor: $16,000 (total variable cost) / $1,600 (wage rate) = 10 units of labor
Therefore, to produce 1,000 units of output per week, 10 units of labor are used.