A firm is producing 1000 units of output for which the average variable cost of production equals 50 cents. The firm's total fixed costs equal $700. What is the total cost of producing 1000 units of output?
A) $700
B) $500
C) $1000
D) $1200

Question

Quizplus · Accepted Answer

Total cost = Total fixed cost + Total variable cost

Total variable cost = Average variable cost x Quantity

Total variable cost = $0.50 x 1000 = $500

Adding the total fixed cost ($700) to the total variable cost ($500), we get:

Total cost = $700 + $500 = $1200

Therefore, the answer is D.

A Firm Is Producing 1000 Units of Output for Which