Question

A firm has a fixed cost of $500 in its first year of operation. When the firm produces 100 units of output, its total costs are $4,500. The marginal cost of producing the 101st unit of output is $300. What is the total cost of producing 101 units

Answer 1

Answer:

$4,800

Explanation:

At 100 units output

Fixed cost= $500

Total cost=$4,500

At 101 units output

Fixed cost=$500

Fixed cost remains constant during production process

Marginal cost= $300

Total cost(101 units)= TC(100 units) + marginal cost of 101 units

= $4,500+$300

TC(101 units)= $4,800