Question

Macroeconomics

Posted 3 months ago

```
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 $100^{\text {th }}$ unit.
What is the average total cost of producing 100 units?
Choose 1 answer:
(A) $\$ 100$
(B) $\$ 70$
(C) $\$ 90$
(D) $\$ 91$
(E) $\$ 80$
```

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Answer from Sia

Posted 3 months ago

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.

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