Melody owns and runs a hot yoga studio. Assume that Melody has no fixed costs and that her only costs of production are the instructors she hires to teach classes. Melody's output is measured in terms of the number of students who take classes in a given week. When Melody hires one instructor, the studio's output is 400 students. When Melody hires two instructors, the studio's output is 600 students, and when Melody hires three instructors, the studio's output is 700 students. The average total cost when Melody hires two instructors is $10. What is the total cost when Melody hires two instructors

Question

Corey Newman

Business

8 August, 17:17

Melody owns and runs a hot yoga studio. Assume that Melody has no fixed costs and that her only costs of production are the instructors she hires to teach classes. Melody's output is measured in terms of the number of students who take classes in a given week. When Melody hires one instructor, the studio's output is 400 students. When Melody hires two instructors, the studio's output is 600 students, and when Melody hires three instructors, the studio's output is 700 students. The average total cost when Melody hires two instructors is $10. What is the total cost when Melody hires two instructors

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Answers (1)

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Ronald Hatfield · Answer 1

Total cost = $6,000.

Explanation:

Notice that Melody's output is measured in terms of the number of students.

Therefore, the average total cost, which is a function of cost per unit of output, is given in terms of the number of students by the equation:

Average total cost = Total cost / number of students

When Melody hires two instructors, the studio's output is 600 students, and the average total cost is $10; then:

$10/student = Total cost / 600 students

Total cost = ($10/student) * 600 students = $6,000 ← answer