Alex's total fixed cost to mow 10 lawns is $500. If he spends $400 on gas, labor, and other costs that change when quantity changes, what is his average total cost of producing 10 mown lawns?

Question

Quizplus · Accepted Answer

The average total cost (ATC) is calculated by dividing the total cost by the quantity of output. The total cost includes both fixed and variable costs. Here, the fixed cost is $500 and the variable cost is $400, making the total cost $900 ($500 + $400). Dividing this by the quantity of output (10 lawns) gives an ATC of $90 ($900 / 10).

Alex's Total Fixed Cost to Mow 10 Lawns Is $500