Answer to Question #182410 in Microeconomics for Bhoomesh Hooda

Question

. The Three Amigo’s company produced and sold 500 dog beds. The average cost of production per

dog bed was $50. Each dog be sold for a price of $65. The Three Amigo’s total costs are

a. $7,500

b. $25,000.

c. $32,500.

d. $67,500.

Answer 1

Answer:

option (b) $25,000

Explanation:

Number of dog beds produced and sold = 500

The average cost of production per dog bed = $50

Selling price of each dog bed = $65

Now,

Average cost = [ Total cost ] ÷ [ Number of units produced ]

or

$50 = Total cost ÷ 500

or

Total cost = 500 × $50

or

Total cost = $25,000

Hence,

The answer is option (b) $25,000