Exhibit 8-6
-Refer to Exhibit 8-6. At an output of 100 units, fixed costs equal
A)$550.
B)$200.
C)$450.
D)$1,000.
E)$350.

Question

Exhibit 8-6 
-Refer to Exhibit 8-6. At an output of 100 units, fixed costs equal
A)$550. 
B)$200. 
C)$450. 
D)$1,000. 
E)$350.

Quizplus · Accepted Answer

At an output of 100 units, the total cost (fixed and variable costs combined) is $1,450. Given that variable costs are $5 per unit (as per the slope of the line), we can calculate that at an output of 100 units, variable costs equal $500 (100 units x $5 per unit). Therefore, fixed costs are equal to the difference between total costs and variable costs, which is $950 ($1,450 - $500). Therefore, the fixed costs at an output of 100 units equal $450.

Exhibit 8-6 -Refer to Exhibit 8-6. at an Output of 100 Units