Suppose that a firm is currently producing 1,000 units of output. At this level of output, AVC is $1 per unit, and TFC is $500. What is the firm's TC?
A) $1,500
B) $1,000
C) $501
D) $499

Question

Quizplus · Accepted Answer

The firm's Total Cost (TC) is the sum of Total Fixed Cost (TFC) and Total Variable Cost (TVC). TVC can be calculated by multiplying the Average Variable Cost (AVC) by the quantity of output. Here, TVC = $1 * 1,000 = $1,000. Therefore, TC = TFC + TVC = $500 + $1,000 = $1,500.

Suppose That a Firm Is Currently Producing 1,000 Units of Output