QUESTION 1

Use the following information and table to answer the next 6 questions:

A firm combines labor (L) and capital (K) to produce output (Q). The price of one unit of labor is 20 and the price of one unit of capital is 10.

This firm is producing in the short run (remember that in the short run there is one fixed resource, in this case, capital).

L	K	Q	TC	TFC	TVC	ATC	AFC	AVC	MC
0		0				X	X	X	X
1		50
2							1.25
3	10	150
4						0.8

What is the total fixed cost of the firm, when the firm uses 0 (zero) units of labor?

	a.	90
	b.	100
	c.	120
	d.	10

3 points

QUESTION 2

Given the information and table in Question#1:What is the marginal cost(MC)of the firm when it uses4(four)units of labor?

	a.	0.4
	b.	0.27
	c.	0.22
	d.	None of the other choices

3 points

QUESTION 3

Given the information and table in Question#1:What is the average variablecost(AVC)of the firm when it uses 3(three)units of labor?

	a.	0.94
	b.	0.35
	c.	0.33
	d.	0.40

3 points

QUESTION 4

Given the information and table in Question #1:What is the total variable cost (TVC)of the firm when it uses 4(four) units of labor?

	a.	100
	b.	80
	c.	90
	d.	70

3 points

QUESTION 5

Given the information and table in Question #1: What is the total cost (TC) of the firm when it uses 0 (zero) unit of labor?

	a.	90
	b.	80
	c.	100
	d.	None of the other choices.

3 points

QUESTION 6

Given the information and table in Question #1: What is the level of output,Q of the firm when it uses 2(two) units of labor?

	a.	50
	b.	80
	c.	60
	d.	70