If a firm incurs a cost of $50,000 when nothing is produced and $50,010 when one unit is produced:

Question

Quizplus · Accepted Answer

In the short run, fixed costs exist, which is why the firm incurs a cost even when nothing is produced (A). The variable cost of producing the first unit is the difference in total cost, which is $10 (B). The average total cost for the first unit is the total cost divided by the quantity, which is $50,010 (C).

If a Firm Incurs a Cost of $50,000 When Nothing