The Framing Gallery frames posters. The Framing Gallery has total fixed costs of

Question

The Framing Gallery frames posters. The Framing Gallery has total fixed costs of $500. The Framing Gallery's average variable cost is $20 and its average total cost is $25. The Framing Gallery is currently framing 5 posters. 25 posters 100 posters. a number of posters that is indeterminate from this information The average variable cost of producing ice cream sundaes are minimized when 100 sundaes are produced. The total cost of producing 100 sundaes IS$'J00 If fixed cost of product on is $200.what 6 the marginal cost of producing the 100th sundae? $2 $3 $5 indeterminate from the given information.

Explanation / Answer

97 -> We can find AFC since ATC=AFC+AVC or

AFC = ATC-AVC = 25-20=$5.    

AFC=TFC/Q or $5 = $500/Q so Q = 100

98) Average total cost is minimized at an output greater than 100 sundaes.

The average variable cost of producing 100 sundaes is $3.

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