A firm produces 1,000 units of output at an average variable cost of production of 50 cents. The firm's total fixed costs equal $700. The total cost of producing 1,000 units of output equals:

Question

Quizplus · Accepted Answer

Total cost = Total fixed cost + Total variable cost
Total variable cost = Average variable cost of production × Quantity produced
Total variable cost = 0.5 × 1000 = $500
Total cost = $500 + $700 = $1,200. 
Therefore, the answer is option D.

A Firm Produces 1,000 Units of Output at an Average