At an output of 1,000 units per year, a firm's variable costs are $5,000 and its average fixed costs are $3. Its total costs per year are
A)$10,000.
B)$8,000.
C)$6,000.
D)$5,000.

Question

Quizplus · Accepted Answer

Total costs include both variable costs and fixed costs. The variable costs are given as $5,000. The average fixed costs are $3 per unit, so for 1,000 units, the fixed costs are $3,000 ($3 * 1,000). Adding the variable costs ($5,000) and fixed costs ($3,000) gives total costs of $8,000.

At an Output of 1,000 Units Per Year, a Firm's