Question

In: Economics

A firm produces 100 computers. Its total costs are $100,000 of which fixed costs are $40,000....

A firm produces 100 computers. Its total costs are $100,000 of which fixed costs are $40,000. What are its:

Average Fixed Costs
Average Variable Costs
Average Total Costs
When it produces another computer its total costs rise to $100,800. What is the marginal cost of the 101^st computer?

Expert Solution

Answer:-

(a). Average Fixed Costs = Fixed Costs / Quantity

= 40,000 / 100

= 400

(b). Average Variable Costs:-

Variable Costs = Total Cost – Fixed Cost

= 100,000 – 40,000

= 60,000

Average Variable Costs = Variable Costs / Quantity

= 60,000 / 100

= 600

(c). Average Total cost = Total Cost / Quantity

= 100,000 / 100

= $1,000

(d). When it produces another computer its total costs rise to $100,800,

The marginal cost of the 101st computer = 100,800 - 100,000 = $800

Rahul Sunny answered 1 month ago

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