-The firm described in Table 8-1 has a fixed cost of ____ at its optimal level of output.
A)2
B)6
C)10
D)26

Question

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-The firm described in Table 8-1 has a fixed cost of ____ at its optimal level of output.
A)2 
B)6 
C)10 
D)26

Quizplus · Accepted Answer

At the optimal level of output, the firm experiences minimum average total cost (ATC). From the table, we can see that the lowest ATC value is achieved at output level 4 units, where ATC is $5.5. At this output level, the firm's total cost (TC) is $22 ($5.5 x 4). Since the total variable cost (TVC) is $12 at this output level, we can conclude that the fixed cost (FC) is $10 ($22 - $12 = $10). Therefore, the fixed cost at the optimal level of output is $10.

​ -The Firm Described in Table 8-1 Has a Fixed Cost

-The Firm Described in Table 8-1 Has a Fixed Cost