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10 May, 00:38

The Toys-R-Us Toy Company can produce 500 water pistols for a total cost of $1,400. If the variable cost of producing 500 water pistols is $1,300 then

A. fixed cost must be $100

B. marginal cost must be $1,300

C. marginal cost must be increasing

D. average variable cost must be decreasing

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Answers (1)
  1. 10 May, 01:09
    0
    The Correct option is Option A.

    Explanation:

    Total quantities of water pistols produced = 500 units.

    Total costs incurred during production = $1400.

    Variable costs of producing the 500 units of water Pistols = $ 1300.

    But we know that:

    Total cost = Fixed Costs + Variable Costs.

    Therefore:

    $ 1400 = Fixed Costs + $1300.

    Fixed Costs = $ 1400 - $1300.

    Fixed is $100.
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