Suppose a firm is producing 500 units of output, incurring a total cost of $700 000 and total fixed cost of $100 000. It can be concluded that average variable cost is
A) $1200.
B) $1600.
C) $600.
D) $1400.
E) $200.

Question

Quizplus · Accepted Answer

Average variable cost is total variable cost divided by the number of units produced. In this case, total variable cost is $700,000 - $100,000 = $600,000. So, average variable cost is $600,000 / 500 = $1200.

Suppose a Firm Is Producing 500 Units of Output, Incurring