Question

A firm produces 100 units of output at a total cost of 1,200. If fixed costs are 100, what is the variable cost per unit?

1) 10
2) 11
3) 12
4) 13

Answer 1

The variable cost per unit can be calculated by subtracting the fixed costs from the total cost and then dividing the result by the number of units produced.

Step-by-step explanation:

The variable cost per unit can be calculated by subtracting the fixed costs from the total cost and then dividing the result by the number of units produced. In this case, the fixed costs are given as 100 and the total cost is given as 1,200 for 100 units of output. So, the variable cost per unit can be calculated as follows:

Variable cost per unit = (Total cost - Fixed costs) / Number of units produced = (1,200 - 100) / 100 = 1,100 / 100 = 11

Therefore, the variable cost per unit is 11.