Firm X's total fixed costs are $1,000. Its total variable costs of producing 100 units are $2,000, and its total variable costs of producing 200 units are $4,000. What are its average costs of producing 100 and 200 units of output?
A) $30 and $25
B) $20 and $20
C) $10 and $5
D) $25 and $30

Question

Quizplus · Accepted Answer

For 100 units, the total cost is $1,000 (fixed) + $2,000 (variable) = $3,000. The average cost is $3,000 / 100 = $30. For 200 units, the total cost is $1,000 (fixed) + $4,000 (variable) = $5,000. The average cost is $5,000 / 200 = $25.

Firm X's Total Fixed Costs Are $1,000