At an output of 3,000 units per year, a firm's total variable costs are $1,000 and its average fixed costs are $2. Its total costs per year are:
At an output of 3,000 units per year, a firm's total variable costs are $1,000 and its average fixed costs are $2. Its total costs per year are:
Managerial Economics: A Problem Solving Approach
5th Edition
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Chapter7: Economies Of Scale And Scope
Section: Chapter Questions
Problem 3MC
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Question
At an output of 3,000 units per year, a firm's total variable costs are $1,000 and its average fixed costs are $2. Its total costs per year are:
Expert Solution
Step 1
The total cost is the minimum amount of money needed to produce some quantity of output. It is the sum of the total fixed and variable costs. That is,
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