Question

Suppose that, when producing 10 units of output, a firm's AVC is $22, its AFC is $5, and its MC is $30. This:

A. firm's ATC is $35.
B. firm's ATC is $57.
C. firm's total cost is $270.
D. firm's total cost is $30.

Answer 1

The firm's ATC is $27 and the total cost is $270.

Step-by-step explanation:

To find the firm's average total cost (ATC), we need to calculate it by dividing the total cost by the total quantity produced. Given that the average variable cost (AVC) is $22 and the average fixed cost (AFC) is $5, we can calculate the ATC using the formula:

ATC = AVC + AFC

ATC = $22 + $5 = $27

Therefore, the firm's ATC is $27, which is not one of the options listed in the question.

To calculate the firm's total cost, we need to multiply the ATC by the quantity produced:

Total Cost = ATC * Quantity

Total Cost = $27 * 10 = $270

Therefore, the firm's total cost is $270, which is option C in the question.