A firm produces 300 units of output at a total cost of $1,000. If fixed costs ar

Question

A firm produces 300 units of output at a total cost of $1,000. If fixed costs are $100, Answer a. average total cost is $4. b. average variable cost is $3. c. average fixed cost is $10. d. average total cost is $5. A firm produces 300 units of output at a total cost of $1,000. If fixed costs are $100, average total cost is $4. average variable cost is $3. average fixed cost is $10. average total cost is $5. a. average total cost is $4. b. average variable cost is $3. c. average fixed cost is $10. d. average total cost is $5.

Explanation / Answer

Total Cost = Total Fixed Cost + Total Variable Cost

Total Variable Cost = 1000 - 100 = 900

Total Units = 300

Average Variable Cost = Total Variable Cost/Total Units = 900/300 = 3

b. average variable cost is $3

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