A firm in a purely competitive industry is currently producing 1,000 units per day at a total cost of $450. If the firm produced 800 units per day, its total cost would be $300, and if it produced 500 units per day, its total cost would be $275. Instructions: In parts a and c, round your answers to 2 decimal places. In part d, round your answer to 1 decimal place. a. What are the firm's ATC per unit at these three levels of production?

Question

Douglas Scott

Business

28 October, 20:40

A firm in a purely competitive industry is currently producing 1,000 units per day at a total cost of $450. If the firm produced 800 units per day, its total cost would be $300, and if it produced 500 units per day, its total cost would be $275. Instructions: In parts a and c, round your answers to 2 decimal places. In part d, round your answer to 1 decimal place. a. What are the firm's ATC per unit at these three levels of production?

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Answers (1)

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Jacoby Moss · Answer 1

At 1,000 units per day, ATC per unit is $0.45 per unit.

At 800 units per day, ATC per unit is $0.375 per unit.

At 500 units per day, ATC per unit is $0.55 per unit.

Explanation:

ATC is the average total cost. It refers to the total cost incurred, on average, in producing a single unit of production. It is calculated as follows.

ATC = Total Cost / Output

ATC per unit at the given levels of production is as follows.

When 1,000 units per day produced:

ATC = $450 / 1,000

= $0.45 per unit

When 800 units per day produced:

ATC = $300 / 800

= $0.375 per unit

When 500 units per day produced:

ATC = $275 / 500

= $0.55 per unit