Suppose that a firm is currently producing 500 units of output. At this level of output, TVC = $10,000 and TFC = $25,000. What is the firms ATC?
A) $20
B) $50
C) $70
D) $100

Question

Quizplus · Accepted Answer

To calculate average total cost (ATC), we need to divide total cost (TC) by the level of output (q).

TC = TVC + TFC = $10,000 + $25,000 = $35,000

ATC = TC / q = $35,000 / 500 units = $70 per unit.

Therefore, the answer is C.

Suppose That a Firm Is Currently Producing 500 Units of Output