In the short run, if average variable cost equals $50, average total cost equals $75, and output equals 100, the total fixed cost must be
A) $25.
B) $2,500.
C) $5,000.
D) $7,500.

Question

Quizplus · Accepted Answer

Total fixed cost = Total cost - Total variable costTotal cost = Average total cost * Output = $75 * 100 = $7,500Total variable cost = Average variable cost * Output = $50 * 100 = $5,000Total fixed cost = $7,500 - $5,000 = $2,500

In the Short Run, If Average Variable Cost Equals $50