Question

Suppose the wage (w) is $10 and the cost of capital (v) is $15. What is the average total cost of producing 10 widgets when they are produced in the least-cost way

Answer 1

$17

Step-by-step explanation:

Note: The missing table for this question is attached below as picture

Q=10

Cost Minimizing K=6, L=8

W=10, V=15

Cost Function (C)= WL + VK

C = $10*8 +$15*6

C = $80 + $90

C = $170

Now we calculate the average total cost of producing 10 widgets?

Average total cost = C/Q

Average total cost = $170/10

Average total cost = $17