A firm's average total cost is $100, its average variable cost is $90, and its total fixed cost is $1,000. Its output is
A) less than 70 units.
B) between 70 and 120 units.
C) between 120 and 170 units.
D) more than 170 units.

Question

Quizplus · Accepted Answer

The average total cost (ATC) is the sum of average variable cost (AVC) and average fixed cost (AFC). Given ATC = $100 and AVC = $90, AFC = $10. Total fixed cost (TFC) is $1,000, so output = TFC/AFC = $1,000/$10 = 100 units, which is between 70 and 120 units.

A Firm's Average Total Cost Is $100, Its Average Variable