With fixed costs of $200,a firm has average total costs of $5 and average variable costs of $3.Its output is:
A)100 units.
B)40 units.
C)66.67 units.
D)Need more information

Question

​With fixed costs of $200,a firm has average total costs of $5 and average variable costs of $3.Its output is:
A)​100 units.
B)40 units.
C)66.67 units.
D)​Need more information

Quizplus · Accepted Answer

Average total cost (ATC) is calculated as total cost divided by quantity (Q). Given ATC = $5, and fixed costs (FC) = $200, we can find total cost (TC) as ATC * Q. Also, TC = FC + variable costs (VC), where VC = average variable cost (AVC) * Q. Solving these equations: $5Q = $200 + $3Q, gives Q = 100 units.

​With Fixed Costs of $200,a Firm Has Average Total Costs

With Fixed Costs of $200,a Firm Has Average Total Costs