Question

The average variable costs of a company are equal to $20 per unit produced at its current level of output in the short run. Its average fixed costs are equal to $30 per unit produced. The total costs at this output level are equal to $2,500.

Required:
a. What is the company’s current output level?
b. What are the total variable costs at this output level?
c. What are the total fixed costs?

Answer 1

Answer:

Results are below.

Explanation:

First, we need to calculate the number of units produced:

Number of units= total cost/ average unitary cost

Number of units= 2,500 / (20 + 30)

Number of units= 50 units

Now, the total variable cost:

Total variable cost= 50*20

Total variable cost= $1,000

Finally, the fixed costs:

Fixed cost= 50*30

Fixed cost= $1,500