Answered: At an output level of 100 units a firm…

At an output level of 100 units a firm has average total costs of $80 and average variable costs of $50. Its total fixed costs are: A. $1,000 B. $3,000 C. $5,000 D. $7,000

Micro Economics For Today

10th Edition

ISBN:9781337613064

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter7: Proudction Costs

Section: Chapter Questions

Problem 6SQP

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Question

25. At an output level of 100 units a firm has average total costs of $80 and average variable costs of $50. Its total fixed costs are:
A. $1,000
B. $3,000
C. $5,000
D. $7,000

Definition Definition Measure of the cost of production per unit of output, including only variable costs such as wages, materials, and utilities. AVC is calculated by dividing total variable cost by the number of units produced. Understanding average variable cost is important for businesses to make decisions on pricing, production levels, and profitability.

Expert Solution

Step 1

Total fixed cost refers to cost incurred by a firm in order to acquire the fixed factors of production like cost of machinery, buildings, depreciation, etc.

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