Suppose that a firm is currently producing 500 units of output. At this level of output, TVC = $10,000 and TFC = $25,000. What is the firms ATC?
Part 2
A.
$100
B.
$70
C.
$20
D.
$50
To find the firm's Average Total Cost (ATC), we need to calculate the Total Cost (TC) and then divide it by the number of units produced.
Total Cost (TC) = Total Variable Cost (TVC) + Total Fixed Cost (TFC)
TC = $10,000 + $25,000
TC = $35,000
Average Total Cost (ATC) = Total Cost (TC) / Quantity
ATC = $35,000 / 500
ATC = $70
So, the firm's ATC is $70.