The total cost of production when output is zero is $100. The average total cost at one unit of output is $150. According to this information:

Question

Quizplus · Accepted Answer

The total cost of production when output is zero represents the fixed costs, which are $100. When one unit is produced, the total cost is the average total cost times the number of units, which is $150. This means the total cost increased by $50 to produce that one unit, indicating that the marginal cost of the first unit is $50, and the increase in total cost ($50) from producing one unit is the total variable cost for that unit. Therefore, all statements are true.

The Total Cost of Production When Output Is Zero Is