A firm uses labour, L and capital K, to produce a single product, X. capital is fixed but labour is variable. The firm’s production function is:
X=-0.2L3 + 18L2 + 1620L.
Where X is the number of units of the product per week, and L is the number of persons employed.
A. A t what weekly output is marginal cost equal to average variable cost?
B. if the price of the product is $0.20 per unit, what is the maximum weekly wage that the firm would pay rather than close down?

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A Marginal cost MC is equal to the average variable cost AVC when the average variable cost is at ... View the full answer