A firm has a fixed cost of $500 in its first year of operation. When the firm produces 100 units of output, its total costs are $4,500. The marginal cost of producing the 101st unit of output is $300. What is the total cost of producing 101 units?
A)$46.53
B)$800
C)$4,800
D)$5,300

Question

Quizplus · Accepted Answer

To find the total cost of producing 101 units, we need to first find the total cost of producing 100 units.

Total cost of producing 100 units = $4,500 - $500 (fixed cost) = $4,000

Now, we can use the marginal cost given to find the total cost of producing 101 units:

Total cost of producing 101 units = Total cost of producing 100 units + Marginal cost of producing the 101st unit 
Total cost of producing 101 units = $4,000 + $300 = $4,300

Therefore, the total cost of producing 101 units is $4,300. However, this option is not provided in the answer choices. The closest option is C, which is $4,800. This could be a possible typo or error in the question.

A Firm Has a Fixed Cost of $500 in Its