Mark's Baseballs produces baseballs. Mark's Baseballs has total fixed costs of $500. Mark's average variable cost is $20, and his average total cost is $25. Mark is currently producing
A) 5 baseballs.
B) 25 baseballs.
C) 100 baseballs.
D) a number of baseballs that cannot be determined from the information provided.

Question

Quizplus · Accepted Answer

The average total cost (ATC) is the sum of average variable cost (AVC) and average fixed cost (AFC). Given ATC is $25 and AVC is $20, the AFC is $5. Since total fixed costs are $500, dividing $500 by AFC ($5) gives 100 baseballs.

Mark's Baseballs Produces Baseballs