Assume that in the short run a firm is producing 100 units of output, has average total costs of $100, and average fixed costs of $20. The firm's total variable cost at this output level is
A) $120.
B) $80.
C) $8,000.
D) $12,000.

Question

Quizplus · Accepted Answer

Total cost is the sum of total fixed cost and total variable cost. Given average total cost (ATC) is $100 for 100 units, total cost is $10,000. Average fixed cost (AFC) is $20, so total fixed cost is $2,000. Therefore, total variable cost is $10,000 - $2,000 = $8,000.

Assume That in the Short Run a Firm Is Producing