Smith Technologies has average variable costs of $1 and average total costs of $3 when it produces 500 units of output.The firm's total fixed costs equal

Question

Quizplus · Accepted Answer

Using the given information, we can calculate the total costs of producing 500 units of output:

Total Costs = Average Total Costs x Quantity
Total Costs = $3 x 500
Total Costs = $1,500

We can then use the formula for total costs to calculate the total fixed costs:

Total Costs = Total Fixed Costs + Total Variable Costs
$1,500 = Total Fixed Costs + ($1 x 500)
$1,500 = Total Fixed Costs + $500
Total Fixed Costs = $1,500 - $500
Total Fixed Costs = $1,000

Therefore, the answer is C: $1,000.

Smith Technologies Has Average Variable Costs of $1 and Average