When a firm produces 1000 widgets with total cost of $2000 and fixed cost of $1000,what is the average variable cost?
A) $2
B) $1
C) $0.5
D) $0.2

Question

Quizplus · Accepted Answer

- Total cost = Fixed cost + Variable cost
- Variable cost = Total cost - Fixed cost
- Variable cost = $2000 - $1000 = $1000
- Average variable cost = Variable cost / Quantity produced
- Average variable cost = $1000 / 1000 widgets
- Average variable cost = $1

When a Firm Produces 1000 Widgets with Total Cost of $2000