A firm currently produces 100 units of output and has fixed costs of $\$ 1000$, variable costs of $\$ 8000$, and the marginal cost of $\$ 100$ for the $100^{ ext {th }}$ unit.

What is the average total cost of producing 100 units?
Choose 1 answer:
(A) $\$ 100$
(B) $\$ 70$
(C) $\$ 90$
(D) $\$ 91$
(E) $\$ 80$

Question

A firm currently produces 100 units of output and has fixed costs of $\$ 1000$, variable costs of $\$ 8000$, and the marginal cost of $\$ 100$ for the $100^{	ext {th }}$ unit.

What is the average total cost of producing 100 units?
Choose 1 answer:
(A) $\$ 100$
(B) $\$ 70$
(C) $\$ 90$
(D) $\$ 91$
(E) $\$ 80$

Accepted Answer

∻Solution∻ ‖ a ⋮ Average Total Cost Formula: The average total cost (ATC) is calculated by dividing the total cost (TC) by the quantity (Q) of output produced. The formula is ATC = \frac{TC}{Q}. ‖ ‖ b ⋮ Calculating Total Cost: The total cost is the sum of fixed costs (FC) and variable costs (VC). Given FC = \$1000 and VC = \$8000, we have TC = FC + VC = \$1000 + \$8000 = \$9000. ‖ ‖ c ⋮ Computing Average Total Cost: With TC = \$9000 and Q = 100 units, the ATC is ATC = \frac{\$9000}{100} = \$90. ‖ ∻Answer∻ ⚹ \$90 ⚹ ∻Key Concept∻ ⚹ Average Total Cost (ATC) ⚹ ∻Explanation∻ ⚹ ATC is found by dividing the total cost by the quantity of output produced. ⚹◊What is the formula for average total cost in economics?⍭ Generate me a similar question◊$

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