Asked by Colby Holtman on Jul 02, 2024
Verified
If a firm produces 8 units of output with average fixed cost=$40 and average variable cost=$25,what is its total cost?
A) $320
B) $200
C) $520
D) $1,000
Total Cost
The complete cost of production, encompassing both fixed and variable costs, for a good or service.
Average Fixed Cost
The fixed costs of production divided by the quantity of output produced; decreases as production increases.
Average Variable Cost
The per unit cost of variable inputs divided by the total quantity of output produced, reflecting the variable cost of production.
- Understand the meaning and process of calculating total costs (TC), recognizing the differences between fixed costs (FC) and variable costs (VC).
Verified Answer
MN
Mahnoor NadeemJul 03, 2024
Final Answer :
C
Explanation :
Total cost = (Average fixed cost + Average variable cost) x Quantity of output produced
Total cost = ($40 + $25) x 8 units
Total cost = $65 x 8 = $520
Total cost = ($40 + $25) x 8 units
Total cost = $65 x 8 = $520
Learning Objectives
- Understand the meaning and process of calculating total costs (TC), recognizing the differences between fixed costs (FC) and variable costs (VC).