Question

During the previous month, a firm produced $250$tablet devices at an average variable cost of $\backslash (40$and at an average fixed cost of$\backslash )10$. What were the firm's total costs during the month?

Short answer

The firm's total costs during the month is$\$12,500$.

Step-by-step solution

Introduction

If such price from its products is below incremental cost curve so at profit-maximizing output level, a company can also opt to dissolve (or, more generally if it sells at multiple prices, its average revenue is a smaller amount than AVC). Developing everything won't create enough capital to afford the operating costs; producing anything would add deficits (costs in more than revenues) to the prices that'd inevitably be faced (the fixed costs). The firm just loses maintenance expenses from not delivering.

Explanation

Calculating Total Variable Cost
Total variable cost = Average variable cost$\times$ Output produced
$=\$40\times 250$

$=\$10,000$

Calculate Total fixed costs
Total variable cost = Average fixed costs $\times$ Output produced
$=\$10\times 250$

$=\$2,500$

Calculating Total Cost
Total Cost = Total fixed charge $+$ Total Variable Cost
$=\$10,000+\$2,500$

$=\$12,500$

The firm's total cost during the month is$\$12,500$.