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How much of the average total cost is made up of variable costs? A firm producing 7 units of output has an average total cost of Rs. 150 and has to pay Rs.350 to its fixed factors of production whether it produces or not.



A. Rs.200
B. Rs.50
C. Rs.300
D. Rs.100

This question is part of Theory Of Production And Cost
Asked by Sweetsalman, Last updated: Jun 23, 2020

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3 Answers

M. Klose

M. Klose, Content Writer, Oakland

Answered Jan 04, 2019

Whenever a company is selling a product, there are different costs associated with that one product. The owner must determine how much that product costs them to make or procure. However, there are other costs associated with that product.

These include the store housing that product and the employees who require pay to try to sell that product. There are many other factors too. Therefore, in the math problem, a firm is producing seven units of output and has an average total cost of 150.

They have to pay 350 to its fixed factors of production whether it produces, sells or not. The average total cost which is made up of the variable costs would come to a total cost of 100.

 

John Adney

John Adney

Answered Dec 13, 2016

Can you explain that to me more
 

John Smith

John Smith

Answered Nov 03, 2016

Rs.100
 

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