A firm's average total cost is $100, its average variable cost is $90, and its total fixed cost is $1000. What is the output?
I'm not sure how to figure this one out. Any help appreciated.
Do you know the formulas?
Let be total fixed cost
Let be total cost
Let be total variable cost
Let be quantity produced (output)
Let be average total cost
Let be average fixed cost
Let be avereage variable cost
We have the formula:
if we divide everything by we get,
but when we divide by , what we are actually finding are the average costs, so
we are given the and we want to find
Now, as i said before
so
But we don't know the , so let's use formula (3) to find it
So finally,
EDIT: Beaten by CaptainBlack...yet again! Plus his way is a lot shorter. He's not the Captain for nothing