At its current short-run level of production, a firm's average variable costs equal $20
per unit, and its average fixed costs equal $15
per unit. Its total costs at this production level equal $1 comma 400
.
Part 2
What is the firm's current output level?
To determine the firm's current output level, we need to use the given information regarding average variable costs, average fixed costs, and total costs.
The formula for total cost is:
Total Cost = Total Fixed Cost + Total Variable Cost
In this case, the given total cost is $1,400 and the average fixed cost is $15 per unit. We can calculate the total fixed cost by multiplying the average fixed cost by the output level (x):
Total Fixed Cost = Average Fixed Cost x Output Level
So, Total Fixed Cost = $15x
Substituting this into the total cost formula, we get:
$1,400 = $15x + Total Variable Cost
Since the average variable cost is given as $20 per unit, the total variable cost can be calculated as:
Total Variable Cost = Average Variable Cost x Output Level
So, Total Variable Cost = $20x
Plugging this back into the total cost formula, we have:
$1,400 = $15x + $20x
Combining like terms, we get:
$1,400 = $35x
Now, we can solve for the output level (x) by dividing both sides of the equation by $35:
x = $1,400 / $35
x = 40
Therefore, the firm's current output level is 40 units.
To find the firm's current output level, we need to calculate the total number of units produced.
The total cost (TC) of production is equal to the sum of average variable costs (AVC) and average fixed costs (AFC) multiplied by the number of units produced (Q):
TC = (AVC + AFC) × Q
Given that the total cost (TC) is $1,400, the average variable cost (AVC) is $20, and the average fixed cost (AFC) is $15, we can substitute these values into the equation:
$1,400 = ($20 + $15) × Q
Now, solve for Q:
$1,400 = $35 × Q
Q = $1,400 / $35
Q = 40
Therefore, the firm's current output level is 40 units.
To find the firm's current output level, we need to use the information provided about the firm's costs.
At the current short-run level of production, the firm's average variable costs equal $20 per unit. This means that for each unit produced, the firm incurs an average variable cost of $20.
The firm's average fixed costs equal $15 per unit. This means that regardless of the level of output, the firm incurs an average fixed cost of $15 per unit.
To calculate the firm's current output level, we need to determine the total number of units the firm is producing. We can do this by dividing the total costs ($1,400) by the sum of the average variable cost ($20) and the average fixed cost ($15) per unit.
Current Output Level = Total Costs / (Average Variable Cost + Average Fixed Cost)
Substituting the given values into the formula:
Current Output Level = $1,400 / ($20 + $15)
Current Output Level = $1,400 / $35
Current Output Level = 40 units
Therefore, the firm's current output level is 40 units.