Suppose the total cost of production in the short run is $500,000 when 2,000,000 units are...
Question:
Suppose the total cost of production in the short run is $500,000 when 2,000,000 units are produced. Then, average total cost (ATC) is
A) 25 cents per unit and average fixed cost (AFC) is 15 cents per unit.
B) $4 per unit, and average fixed cost (AFC) is $2 per unit.
C) 25 cents per unit and average fixed cost (AFC) is unknown given the available information.
D) $4 per unit, and average fixed cost (AFC) is unknown given the available information.
Average Cost:
Average cost is the per unit cost of producton of goods. Average Cost is calculated by dividing the total cost with the total output. The relationship of average cost and marginal cost determines the phase of production.
Answer and Explanation: 1
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View this answerC. 25 cents per unit and average fixed cost is unknown given the available information.
Reason: Given:
Total Costs = $500000
Output Produced =...
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Average Cost Vs. Total Cost: Making Production Decisions in the Short-Run
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Chapter 4 / Lesson 8
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Learn what the average cost of a firm is and how it differs from total cost. Understand the distinction between short run and long run average total cost.
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