Answer the following questions on the basis of this information for a single firm: total cost of

Question:

Answer the following questions on the basis of this information for a single firm: total = $1000; price paid for labor = $12 per labor unit; price paid for raw materials = $4 per raw-material unit.
a. Suppose the firm can produce 5000 units of output by combining its fixed capital with 100 units of labor and 450 units of raw materials. What are the total cost and average total cost of producing the 5000 units of output?
b. Now assume the firm improves its production process so that it can produce 6000 units of output by combining its fixed capital with 100 units of labor and 450 units of raw materials. What are the total cost and average cost of producing the 6000 units of output?
c. Refer to your answers to 8a and 8b and explain how process innovation can improve economic efficiency.

Cost Of Capital
Cost of capital refers to the opportunity cost of making a specific investment . Cost of capital (COC) is the rate of return that a firm must earn on its project investments to maintain its market value and attract funds. COC is the required rate of...