Economics Problem

 

You are assigned the task of computing the variable capital and labor costs for Cost Cutters production level. Below is a table with the capital and labor requirements for ten different levels of production.

 

MC

00      13      26      39      412      515      618      721      824      927      1030      

Production Level	Capital Save Time On Research and Writing Hire a Pro to Write You a 100% Plagiarism-Free Paper. Get My Paper	VC$12	Labor	VC$6	TVC	AVC

 

Complete the table and answer the following:

 

• Assuming the price of labor is $6 per unit and the price of capital is $12 per unit; compute the total variable costs, the marginal costs, and the average variable costs for the firm.
• Using the numbers that you calculated above, explain the relationship between the marginal cost and average variable cost. Using the same numbers, explain the “marginal cost” in terms of additional inputs needed to produce a marginal unit of output.
• If the output price was $62, how many units of output would the firm produce? Explain.