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?

Question

Part 2
A.
​$500
B.
​$1,000
C.
​$1,500
D.
​$501

Answer 1

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.