A Firm Produces 200 Units of Output at a Total

question 57

Multiple Choice

A firm produces 200 units of output at a total cost of $1,000. The firm's total fixed cost equals $200.The firm's per-unit average variable cost is _____.

• A)$4
• B)$5
• C)$7
• D)$10
• E)$8

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Definitions:

Average Fixed Costs

Costs that do not change with the level of output and are spread over the units of output, thus decreasing per unit as production increases.

Output Increases

Output increases refer to a situation where there is a rise in the quantity of goods or services produced by a company or within an economy.

Total Product

The total output or production achieved by a firm from a given amount of inputs.

Marginal Product

The increase in output that results from employing one more unit of a particular input, keeping all other inputs constant.