Multiple Choice
Based on the graph below, at a quantity of 100, AFC is equal to:
10. The Costs of Production
Graphing Costs
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If average total cost is $50, quantity produced is 10 and total fixed cost $100, what is the total variable cost for the output of 10?
A
500
B
100
C
400
D
1000
Verified step by step guidance1
Start by understanding the relationship between total cost (TC), total fixed cost (TFC), and total variable cost (TVC). The formula is: TC = TFC + TVC.
Given that the average total cost (ATC) is $50 and the quantity produced (Q) is 10, calculate the total cost (TC) using the formula: TC = ATC * Q.
Substitute the given values into the formula: TC = 50 * 10.
Now, use the relationship TC = TFC + TVC to solve for the total variable cost (TVC). Rearrange the formula to find TVC: TVC = TC - TFC.
Substitute the calculated total cost and the given total fixed cost into the formula: TVC = (50 * 10) - 100.
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