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Assume a firm is currently producing 100100 units of output, total fixed costs are $10,000$10,000, and average variable costs are $8$8
Assume a firm is currently producing 100100 units of output, total fixed costs are $10,000$10,000, and average variable costs are $8$8. Based on this information we can conclude, with certainty, that the firm's:
(a) marginal costs are $8$8.
(b) total costs are $10,800$10,800.
(c) average fixed costs are $2$2.
(d) total variable costs are $8,000$8,000.
Expert Solution
The correct answer to the given question is option (b) total costs are $10,800$10,800.
The total variable cost is given by:
=Average variable cost * number of units=$8∗100=$800=Average variable cost * number of units=$8∗100=$800
The total cost is given by:
=Total fixed cost + Total variable cost=$10,000+$800=$10,800
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