In the short run, the Sure-Screen T-Shirt Company is producing 500 units of output. Its average variable costs are $2.00 and its average fixed costs are $.50. The firm's total costs
A)are $2.50.
B)are $1,250.
C)are $750.
D)are $1,100.

Question

Quizplus · Accepted Answer

Total costs include both variable and fixed costs. The average total cost per unit is $2.50 ($2.00 AVC + $.50 AFC). Multiplying this by the output (500 units) gives $1,250.

In the Short Run, the Sure-Screen T-Shirt Company Is Producing