Miller Technologies has average variable costs of $6 and average total costs of $10 when it produces 1,000 units of output. The firm's total fixed costs equal
A) $2,000
B) $3,000
C) $4,000
D) $5,000

Question

Quizplus · Accepted Answer

Total fixed costs can be calculated by subtracting total variable costs from total costs. Here, for 1,000 units, the average total cost is $10 and the average variable cost is $6. Therefore, the total cost is $10,000 (1,000 units * $10) and the total variable cost is $6,000 (1,000 units * $6). The difference, $4,000, represents the total fixed costs.

Miller Technologies Has Average Variable Costs of $6 and Average