Scenario 14-1
Assume a certain firm in a competitive market is producing Q = 1,000 units of output. At Q = 1,000, the firm's marginal cost equals $15 and its average total cost equals $11. The firm sells its output for $12 per unit.
-Refer to Scenario 14-1. At Q = 999, the firm's total costs equal
A)$10,985.
B)$10,990.
C)$10,995.
D)$10,999.

Question

Quizplus · Accepted Answer

At Q = 999, the firm's total costs equal $10,985. This is because the firm's total costs are equal to its fixed costs plus its variable costs. The firm's fixed costs are $1,000, and its variable costs are equal to its marginal cost times its output. At Q = 999, the firm's marginal cost is $15, so its variable costs are $15 * 999 = $14,985. Therefore, the firm's total costs are $1,000 + $14,985 = $10,985.

Scenario 14-1 Assume a Certain Firm in a Competitive Market Is Producing