If Average Fixed Costs Equal $60 and Average Total Costs

question 214

Multiple Choice

If average fixed costs equal $60 and average total costs equal $120 when output is 100, the total variable cost must be

• A) $40.
• B) $60.
• C) $6,000.
• D) $8,000.

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Definitions:

Production

The method of merging different tangible and intangible inputs (like designs and expertise) to produce an item meant for consumption (known as the output).

Opportunity Cost

The cost of foregone alternatives when one option is chosen over another.

Coffee

A popular beverage made from roasted and ground beans of the Coffea plant, consumed worldwide for its stimulating effects.

Production Possibility Frontier

A diagram that maps out all possible highest outputs for two commodities, given a predetermined set of inputs and technology.