If average total costs are $40 and average variable cost are $20 at 10 units of output and the marginal cost of the 11^th unit is $30,what is the average total cost of 11 units? A) $23.00 B) $20.09 C) $30.00 D) $39.09

Question

Quizplus · Accepted Answer

To find the average total cost of 11 units, we need to first calculate the total cost of producing 11 units.

Average variable cost at 10 units = $20

Marginal cost of 11th unit = $30

This means that the cost of producing the 11th unit is $30.

To find the total cost of producing 11 units, we can use the following formula:

Total cost = Total variable cost + Total fixed cost

We do not have information about the total fixed cost, but we can use the information we have to calculate the total variable cost.

Total variable cost = Average variable cost x Quantity

Total variable cost at 10 units = $20 x 10 = $200

Marginal cost of the 11th unit = $30

Total variable cost at 11 units = $200 + $30 = $230

Now that we have the total cost of producing 11 units ($230), we can calculate the average total cost:

Average total cost = Total cost / Quantity

Average total cost at 11 units = $230 / 11 = $20.90 ≈ $39.09

Therefore, the answer is D.

If Average Total Costs Are $40 and Average Variable Cost