Microeconomics Help!!! #1:The Costs of Production II?

Workers at Helpful Homework, Inc. write supplementary problem sets for students who need help outside of school. Helpful Homework, Inc. has signed a lease on their office that requires them to pay monthly rent. The rent for the office is $1,900 per month. Use the available data and the table below to answer the following questions.

Quantity
(Problem sets per month) Total Cost
(Dollars per month)
5 2,000
10 2,100
15 2,300
20 2,600
25 3,000
30 3,500
35 4,100
40 5,000
45 6,500
50 8,500


4.1. The variable cost of producing 15 problem sets in a month is ______.




A. $2,300.00

B. $153.33

C. $400.00

D. $200.00

I would say $400 because you're paying $1900 a month in rent - that's a constant expense. But the monthly cost of 15 sets is $2300. Therefore the difference between the two would be the variable cost - $400.

The relationship between total cost, fixed cost, and variable cost is as follows:

TC = FC + VC

The rent for the office has to be paid regardless of how much you produce, therefore it is a fixed cost.

We are given various numbers for total cost, so we can just use the formula above to determine the variable cost when we produce 15 units.

Rearranging the above formula we get:

VC = TC - FC
VC = 2300 - 1900
VC = 400

Therefore our answer will be C. $400.