In the short run, if average variable costs equal $45, average total costs equal $50, and output equals 100, the total fixed costs will equal
A) $5.
B) $500.
C) $1,000.
D) $5,000.

Question

Quizplus · Accepted Answer

Total fixed costs can be calculated by subtracting total variable costs from total costs. Total variable costs are average variable costs multiplied by output, which is $45 * 100 = $4,500. Total costs are average total costs multiplied by output, which is $50 * 100 = $5,000. Therefore, total fixed costs are $5,000 - $4,500 = $500.

In the Short Run, If Average Variable Costs Equal $45