A county government hires lawyers to defend itself in lawsuits. The local govern

Question

A county government hires lawyers to defend itself in lawsuits. The local government provides its legal staff with an office building. The table below shows how many cases can be handled with different numbers of lawyers over the course of a year. Suppose each lawyer is paid $90, 000 per year and the office building is rented for $400, 000 per year. If the county decides to hire 5 lawyers to handle 21 lawsuits, what will be the average fixed cost of each case? What will be the average variable cost of each case? The average fixed cost of each case will be $ per year, and the average variable cost will be $ (Enter numeric responses using real numbers rounded to two decimal places.)

Explanation / Answer

Total fixed cost (TFC) = Office rent = $400,000

Average fixed cost per case = $400,000 / 21 = $19,047.62

Total variable cost (TVC) = 5 x $90,000 = $450,000

Average variable cost per case = $450,000 / 21 = $21,428.57

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