A factory producing motorcycle helmets employs six workers. At the current produ

Question

A factory producing motorcycle helmets employs six workers. At the current production level, each worker produces 20 helmets per week. Assuming that labour is the only variable input and that the weekly wage equals $600 per week, what is the average variable cost per helmet?
A factory producing motorcycle helmets employs six workers. At the current production level, each worker produces 20 helmets per week. Assuming that labour is the only variable input and that the weekly wage equals $600 per week, what is the average variable cost per helmet?

Explanation / Answer

No of labor = 6

Production or Output per week = 20*6 = 120

Weekly Wage = $600

Average variable costs = Variable costs/Q = 600/120 = $5

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