Question

Suppose that real domestic output in an economy is 20 units, the quabtity of inputs is 30 , and the ptice of each input is $4. The per unit cost of production in the economy described is

a. $10
b. $6
c. $8
d. $5

Answer 1

The per unit cost of production in the economy described is $6 (option b).

Step-by-step explanation:

The per unit cost of production in the economy described is $6 (option b).

At an output of 20 units and a cost of $30 for 30 inputs, the cost per unit can be calculated as follows:

Cost per unit = Total cost / Total output = $30 / 20 units = $1.5/unit

Since each unit of input costs $4, the per unit cost of production is $1.5 + $4 = $6/unit.