Question

At its current​ short-run level of​ production, a​ firm's average variable costs equal ​$30.00 per​ unit, and its average fixed costs equal

​$25.00 per unit. Its total costs at this production level equal ​$3,500

What is the​ firm's output​ level?

​(Your answer should have 2 decimal places​).

What are its total variable costs

​(to the nearest

dollar​)

at this output​ level?

What are its total fixed costs

​(to the nearest dollar​)?

Answer 1

Answer

The total cost is the sum of total variable cost and total fixed cost.

Total Variable Cost =Average Variable Cost * Total Output

Total Fixed Cost = Average Fixed Cost * Total Output

Total Cost = Total Variable Cost + Total Fixed Cost

Or, Total Cost = Average Variable Cost * Total Output + Average Fixed Cost * Total Output

Or, Total Cost = ( Average Variable Cost + Average Fixed Cost ) * Total Output

Here, the firm's average variable cost = ​$30.00 per​ unit, and

firm's average fixed cost = ​$25.00 per​ unit.

The firm's total cost = $3500.00

Let the firm's output​ level be Q.

($30.00) * Q + ($25.00) * Q = $3,500.00

Or, ($30.00 + $25.00) * Q = $3,500.00

Or, $55.00 * Q = $3500.00

Q = $3500.00 / $55.00

Or, Q = 63.63 units.

So, the​ firm's output​ level is 63.63 units.

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The firm's total variable cost = ( ​$30.00) * ( 63.63 ) = $1908.9

Or, firm's total variable cost = $1909.00 (approx.)

So, at this level of output,the​ firm's total variable cost is approximately $1909.

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The firm's total fixed cost = ( ​$25.00) * ( 63.63 ) = $1590.75

Or, firm's total fixed cost = $1591.00 (approx.)

So, at this level of output,the​ firm's total fixed cost is approximately $1591.

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