1. ## Production Costs

I hope that this is in the right section....
I am struggling and second guessing myself. Can someone help me if this is correct?

OK everyone...I am doubting myself a little on this one can someone verify if this is correct? Thanks in advance.

Firm XYZ is currently producing 50 units of output at an average cost of $18. Customer A is willing to offer Firm XYZ$220 to produce 5 more additional units. Firm XYZ's average variable cost and average fixed cost of producing 55 units is $20 and$2. Should Firm XYZ accept the offer?

Q AC TC
50 18 900
55 22 1210

AVC = 20, AFC = 2
ATC = AFC + AVC
ATC = 2 + 20
ATC = 22
No because average cost went up $310 and she’s only offered$220.