Multiple choice

Passage

A competitive firm sells as much as of its product as it chooses at a market price of Rs. 100 per unit. Its fixed cost is Rs. 300 and its variable costs (in rupees) for different levels of production are shown in the following table. Quantity VC FC TC AVC ATC MC 0 0 5 250 10 470 15 700 20 980 25 1350 30 1850 35 2520 40 3400 45 4530 50 5950

When production is 40 units, the average total cost is ________.

  1. Rs. 48.40

  2. Rs. 75.50

  3. Rs. 85

  4. Rs. 92.50
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

At 40 units, Total Cost (TC) = Fixed Cost (FC) + Variable Cost (VC). From the table, FC = 300, VC = 3400. TC = 3700. Average Total Cost (ATC) = TC / Quantity = 3700 / 40 = 92.50.

AI explanation

Using the total cost formula, add the fixed cost to the variable cost. At 40 units of production, the total cost is Rs. 300 plus Rs. 3400, yielding Rs. 3700. The average total cost is the total cost divided by the quantity, so 3700 divided by 40 equals Rs. 92.50.

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