When Acme Dynamite produces 250 units of output, its variable cost is $2,000, and its fixed cost is $500. It sells each unit of output for $25.When Acme Dynamite produces 250 units of output, its average variable cost is ________ and its average total cost is ________.
A)$8; $2
B)$10; $10
C)$10; $2
D)$8; $10

Question

Quizplus · Accepted Answer

Average variable cost is variable cost divided by output; here, $2000/250 = $8. Average total cost is total cost divided by output, here, ($2000 + $500)/250 = $10.

When Acme Dynamite Produces 250 Units of Output, Its Variable