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Homework answers / question archive / Suppose you know the following about a widget manufacturing firm: * The total cost of production is $5,000 * The wage rate is $50 * The firm is currently producing 100 widgets * The average product of labor is 5 This average fixed cost of production is $ _____  and the firm is hiring _____  workers

Suppose you know the following about a widget manufacturing firm: * The total cost of production is $5,000 * The wage rate is $50 * The firm is currently producing 100 widgets * The average product of labor is 5 This average fixed cost of production is $ _____  and the firm is hiring _____  workers

Economics

Suppose you know the following about a widget manufacturing firm:

* The total cost of production is $5,000

* The wage rate is $50

* The firm is currently producing 100 widgets

* The average product of labor is 5

This average fixed cost of production is $ _____  and the firm is hiring _____  workers.

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Average product of labor = Total product / total labor

Putting values from the question, we have:

5 = 100 / total labor

=> total labor = 100/5 = 20 workers

Total variable cost = workers*wage = 20*50 = 1000

Total fixed cost = total cost - total variable cost

= 5000 - 1000 = 4000

Average fixed cost = total fixed cost / total output = 4000/100 = 40

Thus, This average fixed cost of production is $ 40 and the firm is hiring 20 workers

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