HomeQuestionsEconomicsCalculating Average Total Cost
📚 Learning Guide
Calculating Average Total Cost
easy

Arrange the steps to correctly calculate the Average Total Cost (ATC) for a firm producing three units of output.

Master this concept with our detailed explanation and step-by-step learning approach

Learning Path
Learning Path

Question & Answer
1
Understand Question
2
Review Options
3
Learn Explanation
4
Explore Topic

Choose the Best Answer

A

Identify total costs and quantity produced → B. Divide total costs by quantity produced → C. Analyze the resulting ATC → D. Make pricing decisions based on ATC

B

Identify quantity produced → A. Identify total costs and quantity produced → C. Divide total costs by quantity produced → D. Analyze the resulting ATC

C

Analyze the resulting ATC → A. Identify total costs and quantity produced → B. Divide total costs by quantity produced → D. Make pricing decisions based on ATC

D

Make pricing decisions based on ATC → A. Identify total costs and quantity produced → B. Divide total costs by quantity produced → C. Analyze the resulting ATC

Understanding the Answer

Let's break down why this is correct

Answer

To calculate the Average Total Cost (ATC) for a firm producing three units of output, you first need to determine the total cost of production for those three units. Total cost includes both fixed costs, which do not change with the level of output, and variable costs, which do change as more units are produced. Once you have the total cost, you divide that number by the total output, which in this case is three units. For example, if the total cost to produce three units is $30, you would calculate the ATC by dividing $30 by 3, resulting in an ATC of $10 per unit. This means that, on average, it costs the firm $10 to produce each unit when making three units.

Detailed Explanation

First, you need to find out how much it costs to make all the products. Other options are incorrect because This option starts with identifying quantity produced, which is not the first step; This option suggests analyzing ATC before calculating it.

Key Concepts

Average Total Cost (ATC)
Total Costs
Pricing Decisions
Topic

Calculating Average Total Cost

Difficulty

easy level question

Cognitive Level

understand

Ready to Master More Topics?

Join thousands of students using Seekh's interactive learning platform to excel in their studies with personalized practice and detailed explanations.

Start Learning with SeekhExplore More Calculating Average Total Cost Questions