Final answer:
The true statement among the options provided is related to the cost concepts in business—fixed costs, variable costs, average total cost, average fixed cost, and marginal cost. Diminishing marginal returns and the constant nature of fixed costs at zero production are key considerations in identifying the correct statement. D. The marginal cost keeps falling as the number of laborers hired increases.
Step-by-step explanation:
The question relates to the concepts of fixed costs, variable costs, output, and cost analysis in a business context. An important economic principle here is that at zero production, fixed costs remain constant and do not change with the level of production. When calculating total costs at any level of production, we add variable costs (such as labor costs in this scenario) to the fixed costs.
The production details given indicate that the labor cost is $20 per unit. The first laborer produces 20 units, the second laborer adds 15 units, the third adds 10 units, and so on. The options provided in the question each correspond to a different way to analyze costs.
To address the true statement among the options given: Option B states that the average total cost (ATC) at an output of 50 is 11, which may be calculated by taking the total costs (fixed plus variable) and dividing it by the output level. Option C suggests an average fixed cost (AFC) of 10 when the output is 45, found by dividing fixed costs by the output level. Option D asserts that the marginal cost (MC) keeps falling as more laborers are hired, which is not consistent with the concept of diminishing marginal returns, typically demonstrating an upward-sloping marginal cost curve.