Refer to the table below. Quantity Variable Cost (in dollars) Fixed Costs (in do
ID: 1164030 • Letter: R
Question
Refer to the table below.
Quantity
Variable Cost
(in dollars)
Fixed Costs
(in dollars)
Total Costs
(in dollars)
Average Variablel Costs
(in dollars per unit)
Average Total Costs (in dollars per unit)
Marginal Costs
(in dollars per unit)
0
0
40
40
- -
- -
- -
1
15
40
55
15
55
15
2
35
40
75
17.5
37.5
20
3
60
40
100
20
33.3
25
4
90
40
130
22.5
32.5
30
5
125
40
165
25
33
35
6
160
40
200
26.6
33.3
35
If the firm sells 5 units at a price of $30 each, then the marginal unit produced
A. costs less than the average cost.
B. is subtracting from profits.
C. costs the same as the average cost.
D. is adding to profits.
Quantity
Variable Cost
(in dollars)
Fixed Costs
(in dollars)
Total Costs
(in dollars)
Average Variablel Costs
(in dollars per unit)
Average Total Costs (in dollars per unit)
Marginal Costs
(in dollars per unit)
0
0
40
40
- -
- -
- -
1
15
40
55
15
55
15
2
35
40
75
17.5
37.5
20
3
60
40
100
20
33.3
25
4
90
40
130
22.5
32.5
30
5
125
40
165
25
33
35
6
160
40
200
26.6
33.3
35
Explanation / Answer
When the firm is selling 5 units at a price of 30, the marginal cost is 35 and the average cost is 33. Hence MC is not equal to AC. Also, the MC is not less than AC but it is greater. Also since P < AC, there are losses. Hence A, C and D are incorrect and B is correct.
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