Given that the total fixed cost is N1,000, total variable cost N2,500 and the output, 100 unit. Find the average total cost of producing one units?

Answer Details

The average total cost (ATC) is the total cost (TC) divided by the total output (Q). To find the total cost, we need to add the total fixed cost (TFC) and total variable cost (TVC). TFC = N1,000 TVC = N2,500 Q = 100 TC = TFC + TVC = N1,000 + N2,500 = N3,500 ATC = TC/Q = N3,500/100 = N35 Therefore, the average total cost of producing one unit is N35. Answer option (C) is correct.