The table below provides information on output per month and short-run costs for a firm producing outdoor wooden lounge chairs.All costs are in dollars.
TABLE 7-5
-Refer to Table 7-5.What is the average total cost of producing 25 chairs?
A)$13
B)$14
C)$22
D)$23
E)$550

Question

The table below provides information on output per month and short-run costs for a firm producing outdoor wooden lounge chairs.All costs are in dollars.
  TABLE 7-5
-Refer to Table 7-5.What is the average total cost of producing 25 chairs?
A)$13 
B)$14 
C)$22 
D)$23 
E)$550

Quizplus · Accepted Answer

To calculate the total cost of producing 25 chairs, we need to first find the total variable cost and total fixed cost by multiplying the output level with variable cost per unit and adding fixed cost respectively. Total Variable Cost = Output Level * Variable Cost per unit = 25 * 8 = 200 Total Fixed Cost = Fixed Cost = 200 Total Cost = Total Variable Cost + Total Fixed Cost = 200 + 200 = $<<200+200=400>>400 Average Total Cost = Total Cost / Output Level = 400 / 25 = $<<400/25=16>>16 Therefore, the average total cost of producing 25 chairs is $16, which is closest to option C) $22.

The Table Below Provides Information on Output Per Month and Short-Run