If a firm has a total fixed cost of $75 and an average variable cost of $35 for producing 10 units of output, the average total cost would be:
A) $425.
B) $42.50.
C) $110.
D) $350.

Question

Quizplus · Accepted Answer

The average total cost (ATC) is calculated by adding the total fixed cost (TFC) and total variable cost (TVC) and then dividing by the quantity of output produced. The total variable cost is the average variable cost (AVC) times the quantity, which is $35 * 10 = $350. Adding the total fixed cost ($75) gives $425. Dividing this total cost by the quantity (10) gives an ATC of $42.50.

If a Firm Has a Total Fixed Cost of $75