Suppose that a firm is currently producing 500 units of output. At this level of output, AVC is $1 per unit, and TFC is $500. What is the firm's TC?
Part 2
A.
$500
B.
$1,000
C.
$1,500
D.
$501
To calculate the total cost (TC), you need to add the total variable cost (TVC) and the total fixed cost (TFC).
First, calculate TVC by multiplying the average variable cost (AVC) by the quantity of output (500 units):
TVC = AVC * Quantity = $1 * 500 = $<<1*500=500>>500
Next, add the TVC and TFC to get the TC:
TC = TVC + TFC = $500 + $500 = $<<500+500=1000>>1,000
Therefore, the firm's TC is $1,000.
The answer is B. $1,000.