Widgets Inc. produces widgets. If Widget's Fixed Costs are $1,000 and the Average Variable Costs of producing an output of 25 widgets is $60

Widgets Inc. produces widgets. If Widget's Fixed Costs are $1,000 and the Average Variable Costs of producing an output of 25 widgets is $60, then Total Cost of producing that quantity of output is:

impossible to calculate with the information given

$100

$2,500

$1,500

Solutions

Expert Solution

Widgets Inc. produces widgets. If Widget's Fixed Costs are $1,000 and the Average Variable Costs of producing an output of 25 widgets is $60, then Total Cost of producing that quantity of output is: $2500

Explanation

GIVEN TOTAL FIXED COST (TFC) =1000,

AVERAGE FIXED COST(AFC) = TFC/OUTPUT =1000/25 =40.

GIVEN, AVERAGE VARIABLE COST(AVC) = 60

Then AVERAGE COST = AFC +AVC = 40 +60 =100

AVERAGE COST = TC / OUTPUT

TOTAL COST(TC) = AVERAGE COST * OUTPUT =100 *25 =2500.

Rahul Sunny answered 1 year ago

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