Quantity Total Cost (dollars) Variable Cost (dollars) 0 $1,000 $0 100 1,360 360 200 1,560 560...

Question:

Quantity Total Cost (dollars) Variable Cost (dollars)
0$1,000 $0
100 1,360 360
200 1,560 560
300 1,960 960
400 2,760 1,760
500 4,000 3,000
600 5,8004,800

Table shows the short-run cost data of a perfectly competitive firm that produces plastic camera cases. Assume that output can only be increased in batches of 100 units.

What is the fixed cost of production?

A) $0

B) $500

C) $1,000

D) It cannot be determined.

Fixed Cost:

Fixed cost is incurred in the manufacturing process of goods and services and it is not dependent upon the production level. The company will have to incur these costs even if the production level is zero.

Answer and Explanation: 1

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QuantityTotal costVariable costMC = (Change in total cost/Change in quantity)Average variable cost = (Variable cost/Quantity)
01,0000--
1001,3603603....

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Fixed Costs: Definition, Formula & Examples

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Chapter 3 / Lesson 14
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What is a fixed cost? Learn the fixed cost definition and how to calculate it using the fixed cost formula. Compare fixed vs. variable costs and see fixed costs examples in business.


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