Answer:
The answer is "rises from $0.80; $1.33".
Explanation:
please find the complete question in the attached file.
Production companies use, as per the estimates, 5 employees and 25 capital units. Its pay rate is 10 $per employee as well as the rate is 2 $per employee. Thus the overall cost of the production of 125 units.
[tex]\to TC = PL \times L + PK \times K \\\\[/tex]
[tex]= 10\times 5 + 2 \times 25 \\\\= 50 + 50 \\\\ = \$ \ 100 \\[/tex]
[tex]ATC = \frac{TC}{Q}[/tex]
[tex]= \frac{100}{125}\\\\= \$ \ 0.80[/tex]
The production has been reduced to 45 unit efficiency, however, the cost is similar. We also measure for optimum labor, thus, ATC also will decrease
[tex]\to \frac{MPL}{MPK} = \frac{PL}{PK} \\\\\to \frac{K}{L} = \frac{10}{2} \\\\\to K = 5\ L[/tex]
Place it in the production process,
[tex]\to Q = KL\\\\\to 45 = (5L) L\\\\\to 45 = 5 L^2[/tex]
when L = 3 and K = 15:
[tex]\to TC = 3\times 10 + 15 \times 2\\\\[/tex]
[tex]= 30 + 30\\\\= 60[/tex]
[tex]\to ATC = \frac{TC}{Q}\\\\[/tex]
[tex]= \frac{60}{45}\\\\= \$ \ 1.33[/tex]
