Karen runs a print shop that makes posters for large companies. It is a very com
ID: 1221544 • Letter: K
Question
Karen runs a print shop that makes posters for large companies. It is a very competitive business. The market price is currently $1.00 per poster. She has fixed costs of $500.00. Her variable costs are $1,500 for the first thousand posters, $1,200 for the second thousand, and then $800 for each additional thousand posters.
What is her AFC per poster if she prints 1,000 posters?
What is her AFC per poster if she prints 2,000 posters?
What is her AFC per poster if she prints 10,000 posters?
What is her ATC per poster if she prints 1,000?
What is her ATC per poster if she prints 2,000?
What is her ATC per poster if she prints 10,000?
Explanation / Answer
AFC or Average fixed cost for 1000 posters=total fixed cost/number of posters=500/1000=0.50 per poster
AFC or Average fixed cost for 2000 posters=total fixed cost/number of posters=500/2000=0.25 per poster
AFC or Average fixed cost for 10000 posters=total fixed cost/number of posters=500/10000=0.05 per poster
ATC or Average total cost for 1000 posters=total cost /number of posters=(500+1500)/1000=2.00 per poster
ATC or Average total cost for 2000 posters=total cost /number of posters=(500+1500+1200)/2000=1.60 per poster
ATC or Average total cost for 10000 posters=total cost /number of posters=(500+1500+1200+800)/10000=0.40per poster
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