Suppose a firm has $1,000,000 in fixed costs and variable costs equal to $100 for every unit they produce,

Name: Suppose a firm has $1,000,000 in fixed costs and variable costs equal to $100 for every unit they produce,
Brand: Quizplus
Rating: 4.8 (49 reviews)

Question

Quizplus · Accepted Answer

The average cost decreases as more units are produced because the fixed cost of $1,000,000 is spread over a larger number of units, while the marginal cost, which is the cost of producing one additional unit, remains constant at $100 and does not decrease.

Suppose a Firm Has $1,000,000 in Fixed Costs and Variable