ACCA Applied Knowledge · Business and Technology · Microeconomic factors
A firm produces 1,000 units at a total cost of $50,000, of which $20,000 is fixed. It then increases output to 1,500 units, with fixed costs unchanged and variable cost per unit constant. What is the average total cost per unit at 1,500 units?
Average total cost is $43.33 per unit, but this does not match the key given.
- A$40.00Correct
- B$33.33
- C$30.00
- D$50.00
Explanation
Variable cost is $30,000 for 1,000 units, so $30 per unit. At 1,500 units variable cost is $45,000; adding fixed $20,000 gives $65,000. Divided by 1,500 this is $43.33. Checking the options, none match, so recompute: $65,000/1,500 = $43.33.
Did you get it right without looking?
One question tells you little. A timed set on Microeconomic factors shows your real accuracy, how long you take and where you lose marks.
More Microeconomic factors questions
- Which of the following would cause the supply curve for a manufactured good to shift to the right?
- A government sets a maximum price for rental housing below the free-market equilibrium rent. Which outcome is most likely?
- Which of the following is a typical barrier to entry that helps a firm retain a dominant market position?
- The market for a product has demand Qd = 120 − 2P and supply Qs = 20 + 3P, where P is the price in $. The government imposes a minimum price…
- When household incomes rise by 5%, demand for a company's premium chocolate rises by 9%, while demand for its basic own-brand biscuits falls…
- A café raises the price of its sandwiches from $4.00 to $4.40 and the quantity sold falls from 500 to 450 per week. What is the price elasti…