The average total cost of producing 10 units of output is $7.
Average Total Cost refers to cost derived after dividing total cost by the total quantity produced.
Given Information
Fixed Cost = $46
Average Product of Labour = 5 Units
Wage rate = $12.
Since average Productivity means number of units produced in one hour = 5 units. Then, If 10 units of output are produced then, the number of hours needed to produce is 2 hours
Therefore, the Total cost of producing 10 units = Labor cost for 2 hours + Fixed cost
Total cost = ($12 * 2)+ $46
Total cost = $24 + $46
Total cost = $70
Average Total Cost of Producing 10 units = Total cost / Unit
Average Total Cost = $70/10
Average Total Cost = $7
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