You operate a factory that produces beach towels. Your current level of output equals 2000 towels per week. Your weekly variable cost equals $8000. If your total cost each week equals $9000, what is the average total cost of production per towel?
A) $2
B) $4
C) $4.50
D) $8

Question

Quizplus · Accepted Answer

The formula to calculate average total cost (ATC) is:

ATC = total cost / quantity

Given that the factory produces 2000 towels per week, we can substitute the values given in the problem statement to calculate ATC:

ATC = 9000/2000 = 4.50

Therefore, the average total cost of production per towel is $4.50. The correct choice is C.

You Operate a Factory That Produces Beach Towels