When the production of a worker is relatively easily observable, ...

[sc00by25]

When the production of a worker is relatively easily observable, the firm can pay a piece-rate.
 
  Indicate whether the statement is true or false

Question 2

If the total cost of producing one unit of the output is 100 and the marginal cost of that unit is 20, the average fixed cost of producing two units of output is ________.
 
  Fill in the blank(s) with correct word

[recede]

Answer to Question 1

True . A firm needs to measure the output of a worker to be able to pay him according to his production. When this is easy, piece-rates are more likely.

Answer to Question 2

40

Marginal cost = Variable cost ; As we are producing only 1 unit variable cost will be 20
Total Fixed Cost = Total Cost - Total Variable Cost
100 - 20 = 80
Average Fixed Cost = 80/2 = 40

[sc00by25]

Thanks for the timely response, appreciate it

[bulacsom]

Excellent