CIMA BA1 · Chapter 7 · Question 3 of 11
A firm's total costs are $2,000 when output is zero, $5,000 when output is 100 units and $5,040 when output is 101 units. What is the average variable cost at an output of 100 units?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: A) $30
Explanation
Fixed cost is the cost at zero output, $2,000. Variable cost at 100 units = 5,000 - 2,000 = $3,000. AVC = 3,000 / 100 = $30. Average total cost is $50, average fixed cost $20 and marginal cost of the 101st unit $40.
More Costs, revenue and market structures MCQs
- Q5Which of the following is NOT a characteristic of a perfectly competitive market?
- Q6A profit-maximising firm will produce at the output where:
- Q7In the short run, a perfectly competitive firm making a loss should continue to produce as long as:
- Q8Compared with a perfectly competitive industry with the same cost conditions, a profit-maximising monopolist will normally:
- Q9The kinked demand curve model of oligopoly is used to explain: