Question

Variable Fixed Output Marginal Total Total Marginal cost

Input Input units Physical Product of fixed variable cost
Variable input cost (dollars) (dollars)
$0 1 0 $500 0
1 1 10 (A) $500 $200 E
2 1 25 (B) $500 400 (G)
3 1 45 (C) $500 600 (H)
4 1 60 (D) $500 800 (I)
5 1 70 (E) $500 1000 (J)
What is the average total cost of producing 60 units of output?
a. $24.17
b. $21.67
c. $12.50
d. $1.33

Answer 1

The average total cost of producing 60 units of output is:

b. $21.67

Step-by-step explanation:

a) Data and Calculations:

Variable Fixed Output Marginal Physical Total Total Marginal

Input Input Product of Variable fixed variable Cost

input cost cost

0 1 0 $500 $0

1 1 10 (A) $500 $200 (F)

2 1 25 (B) $500 400 (G)

3 1 45 (C) $500 600 (H)

4 1 60 (D) $500 800 (I)

5 1 70 (E) $500 1000 (J)

The total cost of producing 60 units of output = $1,300 ($500 + $800)

Average total cost of producing 60 units of output = $21.67 ($1,300/60)