A firm incurred the following costs in production. Use the information in the table to answer the question below. Output (bags of rice 0 10 20 30 40 50 60 T...
Question 1 Report
A firm incurred the following costs in production. Use the information in the table to answer the question below.
| Output (bags of rice |
0 | 10 | 20 | 30 | 40 | 50 | 60 |
| Total Cost ($) | 100 | 200 | 300 | 380 | 440 | 520 | 600 |
The fixed cost of production is___________
Answer Details
The fixed cost of production is $100.
This is because the fixed cost is the portion of the total cost that does not change with the level of output. Looking at the table, we can see that when the output is zero, the total cost is $100. This means that even if the firm produces zero bags of rice, they still have to pay this $100 fixed cost.
As the level of output increases, the total cost also increases. However, the increase in total cost is due to the variable cost, which is the cost that varies with the level of output (e.g. cost of raw materials, labor, etc.).
Therefore, based on the given information, the fixed cost of production is $100.
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