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) $\$ 80$
(B) $\$ 100$
(C) $\$ 91$
(D) $\$ 70$
(E) $\$ 90$

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) $\$ 80$
(B) $\$ 100$
(C) $\$ 91$
(D) $\$ 70$
(E) $\$ 90$

Accepted Answer

***C*** ∻Key Concept∻ ⚹Average Total Cost (ATC)⚹ ∻Explanation∻ ⚹The average total cost is calculated by dividing the total cost (fixed costs + variable costs) by the quantity of output. In this case, the total cost is $1000 + $8000 = $9000, and the quantity is 100 units. Therefore, $ATC = \frac{9000}{100} = 90$.⚹◊How can the concept of marginal cost be used to determine the optimal level of output for a firm?⍭ Generate me a similar question◊

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