A monopolistic competitor has fixed costs of $100 and marginal costs of $10 per unit. What is its average cost of producing 100 units?
A) $10
B) $11
C) $1,100
D) $2,000

Question

Quizplus · Accepted Answer

The average cost of producing 100 units includes both fixed costs ($100) and variable costs (100 units * $10/unit = $1,000), totaling $1,100. Dividing this total cost by the number of units (100) gives an average cost of $11 per unit.

A Monopolistic Competitor Has Fixed Costs of $100 and Marginal