$$\begin{array} { c c c c c c c }
& \text { Variable } & \text { Total } & & & & \text { Marginal } \
\text { Output } & \text { Cost } & \text { Cost } & \text { AFC } & \text { AVC } & \text { ATC } & \text { Cost } \
1 & 400 & & & & & \
2 & 700 & & & & & \
3 & 1,000 & & & & & \
4 & 1,400 & & & & &
\end{array}$$ Use the above table and assume a fixed cost of $1000.
-At an output of 2,ATC is
A)$350.
B)$700.
C)$850.
D)$1,000.
E)$1,700.

Question

$$\begin{array} { c c c c c c c } 
& \text { Variable } & \text { Total } & & & & \text { Marginal } \
\text { Output } & \text { Cost } & \text { Cost } & \text { AFC } & \text { AVC } & \text { ATC } & \text { Cost } \
1 & 400 & & & & & \
2 & 700 & & & & & \
3 & 1,000 & & & & & \
4 & 1,400 & & & & &
\end{array}$$ Use the above table and assume a fixed cost of $1000.
-At an output of 2,ATC is
A)$350.
B)$700.
C)$850.
D)$1,000.
E)$1,700.

Quizplus · Accepted Answer

ATC (Average Total Cost) is calculated by dividing the total cost by the quantity of output. At an output of 2, the total cost is the sum of variable cost at that output level and fixed cost. The variable cost at an output of 2 is $700, and the fixed cost is $1000, making the total cost $1700. Therefore, ATC = $1700 / 2 = $850.

Use the Above Table and Assume a Fixed Cost of