Suppose that a donut shop has $1,500 of variable costs and $2,500 of fixed costs when it produces 1,000 donuts and sells them for $1 per donut.Average total cost is equal to

Question

Quizplus · Accepted Answer

Total cost can be calculated as follows:
Total cost = Fixed cost + Variable cost
Total cost = $2,500 + $1,500
Total cost = $4,000

Average total cost (ATC) can be calculated as follows:
ATC = Total cost / Quantity produced
ATC = $4,000 / 1,000
ATC = $4.00

Therefore, the answer is C, $4.00.

Suppose That a Donut Shop Has $1,500 of Variable Costs