Assume that a firm's total cost of producing an output of 1,000 units is currently $20,000.If output increases to 2,000 units,total cost increases to $40,000 and the price of inputs and technology remain unchanged,calculate the change in average total cost.
A)Increase of $20
B)Decrease of $20
C)Increase of $40
D)No change

Question

Quizplus · Accepted Answer

The average total cost remains the same because it is $20 per unit both before and after the increase in output (initially $20,000/1,000 units = $20 per unit, and then $40,000/2,000 units = $20 per unit).

Assume That a Firm's Total Cost of Producing an Output