If a Firm Produces 10 Units of Output and Incurs

question 170

Multiple Choice

If a firm produces 10 units of output and incurs $30 in average variable cost and $5 in average fixed cost, total cost is:

• A) $35.
• B) $50.
• C) $300.
• D) $350.

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Definitions:

Average Fixed Cost

The fixed costs of production divided by the quantity of output produced, which decreases as more units are produced.

Output Level

The quantity of goods or services produced by a firm, industry, or economy in a given time period.

Profit-Maximizing Output

The level of production at which a firm achieves the highest possible profit.

Marginal Cost

The cost of producing one additional unit of a product or service.