Question

If the variable costs for a firm are $57, the fixed costs are $143, and the firm sells 40 units, what are the firm's average total costs

Answer 1

Answer:

$5

Explanation:

Average total cost = total costs / total output

Total costs = variable costs + fixed costs

So we plug the amounts into the formula:

Average total cost = 57 + 143 / 40

                               = 5

So the average total cost for this ferm (per unit of output) is $5