ECONOMICS
PROFIT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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A firm currently produces 100 units of output and has fixed cost of $1000, variable cost of $8000, and the marginal cost of $100 for the 100th unit. What is the average total cost of producing 100 units?
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90
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70
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100
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91
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Explanation:
Detailed explanation-1: -When output is 500, a firm’s fixed costs are $10, 000 and its variable costs are $15, 000. The firm’s total costs are therefore: $25, 000.
Detailed explanation-2: -When the firm produces 100 units its total costs are $3, 500. When it produces 101 units of output, its total costs are $3, 750.
Detailed explanation-3: -Marginal cost is calculated by dividing the change in total cost by the change in quantity. Let us say that Business A is producing 100 units at a cost of $100. The business then produces at additional 100 units at a cost of $90. So the marginal cost would be the change in total cost, which is $90.
Detailed explanation-4: -TC= Rs. 330. Was this answer helpful?
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