The price of labour is $45 per week, and the price of land is $48 per hectare.

What is the variable cost of producing 100 bushels of wheat?

Quantity of land (hectares) Quantity of labour (workers) Quantity of produce (bushels)
20 1 0
20 2 50
20 3 100
20 4 140
20 5 170
20 6 190

Question

The price of labour is $45 per week, and the price of land is $48 per hectare.

What is the variable cost of producing 100 bushels of wheat?

Quantity of land (hectares)	Quantity of labour (workers)	Quantity of produce (bushels)
20	1	0
20	2	50
20	3	100
20	4	140
20	5	170
20	6	190

BlackTom AI · Accepted Answer

We need to determine the variable cost of producing 100 bushels of wheat from the given data.
First, identify which input is considered variable. In short-run cost analysis, variable costs depend on the quantity of output through the variable factor(s); here, labour is the variable input while land is fixed at 20 hectares.
Look at the table row that corresponds to the production level of 100 bushels. That row lists Quantity of land = 20 hectares, Quantity of labour = 3 workers, and Quantity of produce = 100 bushels.
The price (cost) of labour is given as $45 per week per worker. Since there are 3 workers employed to produce 100 bushels, the total variable cost contributed by labour is 3 workers × $45/worker = $135.
Note that land costs are fixed in this scenario and do not vary with output in the short run, so land cost would be treated as a fixed or sunk cost rather than a variable cost.
Therefore, the variable cost of producing 100 bushels, based on the data provided, is calculated from the labour input alone: 3 × 45 = 135.

ECO101H1 S LEC0101 topic quiz: behind the supply curve

The price of labour is $45 per week, and the price of land is $48 per hectare. What is the variable cost of producing 100 bushels of wheat? Quantity of land (hectares) Quantity of labour (workers) Quantity of produce (bushels) 20 1 0 20 2 50 20 3 100 20 4 140 20 5 170 20 6 190

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