Question

If the Clearwater Cotton Candy Company hypothetically lays off its workers and shuts down, it incurs costs of $30,000. If it produces at full capacity, it incurs costs of $90,000. One would conclude that:

Answer 1

Answer:

The costs of variable inputs at full capacity is $60,000.

Explanation:

Given:

After shut down cost = $30,000

Total cost on full capacity = $90,000

We know that workers and labor are including in variable cost, in this situation when workers got shut down by the company. The company's total cost will incur $30,000.

So, We say that $30,000 is fixed cost of the company

So, Total cost = Total Variable cost + Total fixed cost

$90,000 = Total Variable cost + $30,000

Total Variable cost = $60,000