If a firm produces 10 units of output and incurs $30 in average variable cost and $35 in average total cost, total fixed cost is:
A) $3.
B) $35.
C) $50.
D) $300.

Question

Quizplus · Accepted Answer

We can use the formula for total cost: 
Total cost = Total fixed cost + Total variable cost 
Average total cost = Total cost / Quantity 
Therefore, 
Total cost = Average total cost x Quantity 
Total variable cost = Average variable cost x Quantity 
Substituting the given values, we get 
35 x 10 = Total fixed cost + 30 x 10 
350 = Total fixed cost + 300 
Total fixed cost = 350 - 300 = $50. 
Therefore, the answer is (C).

If a Firm Produces 10 Units of Output and Incurs