Lim Industries has average variable costs of $1 and average total costs of $4 when it produces 900 units of output. The firm's total fixed costs equal
A)$3.
B)$5.
C)$2,700.
D)$3,700.

Question

Quizplus · Accepted Answer

Total fixed costs can be calculated by subtracting total variable costs from total costs. Average total costs ($4) minus average variable costs ($1) equals $3 per unit. Multiplying this by the number of units (900) gives total fixed costs of $2,700.

Lim Industries Has Average Variable Costs of $1 and Average