A firm produces 2,000 high-quality bicycles per year.At this output, AVC $300 and the firm's fixed costs are $200,000.The firm's total costs are
A)$400.
B)$600,000.
C)$800,000.
D)$500,000.

Question

Quizplus · Accepted Answer

Total costs (TC) = Total fixed costs (TFC) + Total variable costs (TVC)
TVC = AVC x Q (Q is output)
TFC = $200,000
At an output of 2,000: 
TVC = $300 x 2,000 = $600,000
TC = $200,000 + $600,000 = $800,000 
Therefore, the firm's total costs are $800,000. Choice C is the correct answer.

A Firm Produces 2,000 High-Quality Bicycles Per Year