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If you know that with 8 units of output, average fixed cost is $12.50 and average variable cost is $81.25, then total cost at this output level is:

Respuesta :

Answer: The total cost at an output level of eight units is $750.


We have

Average Fixed Cost  (AFC)       $12.50

Average Variable Cost  (VC)   $81.25

Number of units                    8

We compute the total fixed cost (TFC) as follows:

[tex]TFC = AFC * Number of units (output)[/tex]

[tex]\mathbf{TFC = 12.50 * 8 = 100}[/tex]

We calculate Total Variable Cost (TVC) as:

[tex]TVC = VC *number of units[/tex]

[tex]TVC = 81.25 *8 = 650[/tex]

Since Total Costs (TC) is nothing but the sum of total fixed costs and total variable costs,

[tex]TC = TFC + TVC[/tex]

[tex]TC = 100 + 650 = 750[/tex]



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