Answer to Question #274286 in Economics of Enterprise for Fifi

Question

The schedule shows the short run marginal costs of producing good X.

Units of X 1 2 3 4 5

Marginal cost ($) 40 30 30 60 120

Given that the total fixed cost is $20, calculate the level of output which minimises Average Total Cost (ATC).

Answer 1

The formula for average total cost is;

$ATC=\frac{TC}{unit}$