Below are some cost data pertaining to Plant 1,which has total fixed costs of $1,000.Suppose that Plant 2 is exactly twice the size of Plant 1 while using (at economic capacity)twice the amount of labour and materials,and that it produces exactly twice the output.Further,assume that the prices of these inputs do not change.

-Refer to the information above to answer this question.How much is total fixed cost in Plant 2?
A)$2,000.
B)$4,500.
C)$9,000.
D)$15,000.
E)$24,500.

Question

Below are some cost data pertaining to Plant 1,which has total fixed costs of $1,000.Suppose that Plant 2 is exactly twice the size of Plant 1 while using (at economic capacity)twice the amount of labour and materials,and that it produces exactly twice the output.Further,assume that the prices of these inputs do not change.
 
-Refer to the information above to answer this question.How much is total fixed cost in Plant 2?
A)$2,000. 
B)$4,500. 
C)$9,000. 
D)$15,000. 
E)$24,500.

Quizplus · Accepted Answer

Since Plant 2 is exactly twice the size of Plant 1, it will have fixed costs of $2,000 (2 x $1,000). The information provided does not indicate any change in fixed costs with increasing plant size, hence the fixed cost in Plant 2 will be the same as that in Plant 1.

Below Are Some Cost Data Pertaining to Plant 1,which Has