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A firm has fixed costs of $2000 and variable costs of $5 per unit. If it produce

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Question: A firm has fixed costs of $2000 and variable costs of $5 per unit. If it produces 500 units, what are the total costs?

Options:

  1. $2500
  2. $3000
  3. $2000
  4. $3500

Correct Answer: $3000

Solution: 

Total costs = Fixed costs + (Variable cost per unit * Number of units) = 2000 + (5 * 500) = 2000 + 2500 = $4500

A firm has fixed costs of $2000 and variable costs of $5 per unit. If it produce

Practice Questions

Q1
A firm has fixed costs of $2000 and variable costs of $5 per unit. If it produces 500 units, what are the total costs?
  1. $2500
  2. $3000
  3. $2000
  4. $3500

Questions & Step-by-Step Solutions

A firm has fixed costs of $2000 and variable costs of $5 per unit. If it produces 500 units, what are the total costs?
  • Total Costs Calculation – Understanding how to calculate total costs by adding fixed costs to the product of variable costs per unit and the number of units produced.
  • Fixed vs Variable Costs – Differentiating between fixed costs, which do not change with the level of production, and variable costs, which do.
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