To determine the total cost.
Answer to Problem 2MCQ
(d) $750.
Explanation of Solution
A firm’s total cost is the average cost of a good multiplied by the number of goods produced.
It can be written mathematically as
Where TC is total costs, ATC is
ATC = $15 and, Q = 50
Hence, the total cost is $15×50 = $750.
The total cost is $750. Hence (d) is the right answer.
Options (a), (b), (c), and (e) are incorrect. $14 and $15 are various price and average total cost levels and are not total costs. Also, $460 is the total cost level while ATC is the lowest. However, it is not the profit-maximizing level of output. Similarly, $1000 is the total revenue earned by the sale of 50 units of the product and it is not the total cost level at the profit-maximizing level of output.
Introduction:
Total cost of a firm is the overall production costs of a firm at the given level of production. It includes various expenses by the firm on the purchase of inputs of production such as land, labor, purchase of raw materials, etc. It includes all implicit and explicit costs of the firm.
Chapter 59 Solutions
Krugman's Economics For The Ap® Course
- Principles of Economics (12th Edition)EconomicsISBN:9780134078779Author:Karl E. Case, Ray C. Fair, Sharon E. OsterPublisher:PEARSONEngineering Economy (17th Edition)EconomicsISBN:9780134870069Author:William G. Sullivan, Elin M. Wicks, C. Patrick KoellingPublisher:PEARSON
- Principles of Economics (MindTap Course List)EconomicsISBN:9781305585126Author:N. Gregory MankiwPublisher:Cengage LearningManagerial Economics: A Problem Solving ApproachEconomicsISBN:9781337106665Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike ShorPublisher:Cengage LearningManagerial Economics & Business Strategy (Mcgraw-...EconomicsISBN:9781259290619Author:Michael Baye, Jeff PrincePublisher:McGraw-Hill Education