Suppose that, when producing 35 units of output, a firm's AVC is $20, its AFC is $6, and its MC is $28. This firm's Multiple Choice ATC is $34. ATC is $54. total cost is $910. total cost is $28.
Suppose that, when producing 35 units of output, a firm's AVC is $20, its AFC is $6, and its MC is $28. This firm's Multiple Choice ATC is $34. ATC is $54. total cost is $910. total cost is $28.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
![**Question 5**
Suppose that, when producing 35 units of output, a firm's Average Variable Cost (AVC) is $20, its Average Fixed Cost (AFC) is $6, and its Marginal Cost (MC) is $28. This firm's:
**Multiple Choice Options:**
- ( ) ATC is $34.
- ( ) ATC is $54.
- ( ) Total cost is $910.
- ( ) Total cost is $28.
**Explanation:**
To solve this, we calculate the Average Total Cost (ATC) using the formula:
\[ \text{ATC} = \text{AVC} + \text{AFC} \]
Given:
- AVC = $20
- AFC = $6
\[ \text{ATC} = 20 + 6 = 26 \]
The firm’s question is whether the ATC is $34 or $54, which based on the information provided, neither option for ATC is correct. However, for calculating total cost:
Total Cost = ATC x Quantity
\[ \text{Total Cost} = 26 \times 35 = 910 \]
Thus, the correct answer related to the total cost is $910.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F55fa1b8f-af85-487a-ba3f-73161e455858%2F8d0e767e-37e8-412d-9607-a1128034fbf8%2F9k9ugf_processed.jpeg&w=3840&q=75)
Transcribed Image Text:**Question 5**
Suppose that, when producing 35 units of output, a firm's Average Variable Cost (AVC) is $20, its Average Fixed Cost (AFC) is $6, and its Marginal Cost (MC) is $28. This firm's:
**Multiple Choice Options:**
- ( ) ATC is $34.
- ( ) ATC is $54.
- ( ) Total cost is $910.
- ( ) Total cost is $28.
**Explanation:**
To solve this, we calculate the Average Total Cost (ATC) using the formula:
\[ \text{ATC} = \text{AVC} + \text{AFC} \]
Given:
- AVC = $20
- AFC = $6
\[ \text{ATC} = 20 + 6 = 26 \]
The firm’s question is whether the ATC is $34 or $54, which based on the information provided, neither option for ATC is correct. However, for calculating total cost:
Total Cost = ATC x Quantity
\[ \text{Total Cost} = 26 \times 35 = 910 \]
Thus, the correct answer related to the total cost is $910.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
Recommended textbooks for you
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-…
Economics
ISBN:
9781259290619
Author:
Michael Baye, Jeff Prince
Publisher:
McGraw-Hill Education