If you know that total fixed cost is $200, total variable cost is $600, and total product is 4 units, then average total cost must be
Question
If you know that total fixed cost is 600, and total product is 4 units, then average total cost must be
Solution
The Average Total Cost (ATC) is calculated by dividing the Total Cost (TC) by the quantity of output produced. The Total Cost is the sum of Total Fixed Cost (TFC) and Total Variable Cost (TVC).
Here's the step-by-step calculation:
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First, calculate the Total Cost (TC). This is done by adding the Total Fixed Cost (TFC) and the Total Variable Cost (TVC). In this case, TFC is 600. So, TC = TFC + TVC = 600 = $800.
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Next, calculate the Average Total Cost (ATC). This is done by dividing the Total Cost (TC) by the quantity of output produced. In this case, the quantity of output produced is 4 units. So, ATC = TC / Quantity = 200.
So, the Average Total Cost is $200.
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