Assume that you know the following cost information about Fred's widget company: Its fixed cost is $9,and its total variable cost is $6 for 1 unit; $11 for 2; $ 15 for 3; 20 for 4; and 26 for 5.Given the above information,
A) the marginal cost of providing the second unit is $5.
B) the total cost of producing 4 units is $29.
C) the average total cost of producing five units is $7.
D) all of the above are true.

Question

Quizplus · Accepted Answer

A) To calculate the marginal cost, we need to look at the change in total cost between producing 1 unit and 2 units. The change in cost is $11 - $6 = $5. Therefore, the marginal cost of providing the second unit is $5.
B) To calculate the total cost of producing 4 units, we need to add the fixed cost of $9 to the variable costs of producing 4 units, which is $20. Therefore, the total cost of producing 4 units is $29.
C) To calculate the average total cost of producing 5 units, we need to add the fixed cost of $9 to the variable costs of producing 5 units, which is $26. Then, we divide this total cost by the number of units produced, which is 5. Therefore, the average total cost of producing 5 units is ($9 + $26)/5 = $7. 
All three statements are true based on the given cost information, so the correct choice is D.

Assume That You Know the Following Cost Information About Fred's