Scenario 14-4
The information below applies to a competitive firm that sells its output for $40 per unit.
• When the firm produces and sells 150 units of output, its average total cost is $24.50.
• When the firm produces and sells 151 units of output, its average total cost is $24.55.
-Refer to Scenario 14-4. Suppose the firm is producing 150 units of output and its fixed cost is $975. Then its average variable cost amounts to

Question

Quizplus · Accepted Answer

The total cost for 150 units is 150 * $24.50 = $3,675. The fixed cost is $975, so the variable cost is $3,675 - $975 = $2,700. The average variable cost is $2,700 / 150 = $18.00.

Scenario 14-4 The Information Below Applies to a Competitive Firm That Sells