Question

The information below applies to a competitive firm that sells its output for $40 per unit.

• When the firm produces and sells 150 units of output, its average total cost is $24.50.
• When the firm produces and sells 151 units of output, its average total cost is $24.55.
Refer to Scenario 14-4. When the firm produces 150 units of output, its total cost isA. $3,450.00.B. $3,525.75.C. $3,675.00.D. $3,850.25.

Answer 1

Answer: Option 'c' is correct.

Explanation:

Since we have given that

On producing 150 units, its average total cost = $24.50

We need to find the total cost.

As we know that

`Average\ cost=(Total\ cost)/(No.\ of\ units)\\\\total\ cost=Average\ cost* No.\ of\ units\\\\total\ cost=24.50* 150\\\\total\ cost=\$3675`

Hence, total cost is $3675.00.

Therefore, Option 'c' is correct.