Question

Assume that in the short run a firm is producing 20 units of output, has average total costs of $200, and averase variable costs of $150 The fim's total fixed costs are:

a. 10000
b. 500
c. 50
d. 1000

Answer 1

In the short run, a firm's total fixed costs can be calculated by subtracting the average variable costs from the average total costs and multiplying that number by the output.

Step-by-step explanation:

In the short run, a firm's total fixed costs can be calculated by subtracting the average variable costs from the average total costs and multiplying that number by the output. In this case, the firm is producing 20 units of output, has average total costs of $200, and average variable costs of $150. So, the total fixed costs can be calculated as follows:

Total fixed costs = Average total costs - Average variable costs * Output

Total fixed costs = $200 - $150 * 20

Total fixed costs = $200 - $3000

Total fixed costs = -$2800

Therefore, none of the options given in the question (a. 10000, b. 500, c. 50, d. 1000) are correct answers for the total fixed costs.