Business I / Cost Structures
Practice question · Estimate

Fixed costs are 500€; unit variable cost is 3€. Set the slider to the average total cost at 100 units, in €.

Estimate on a scale from 0€ (0) to 20€ (20).

Hints
  1. ATC=FC/q+vATC = FC/q + v.
  2. 500/100+3500/100 + 3.
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8 (answers within ±0.5 count)

Why

ATC=500/100+3=8ATC = 500/100 + 3 = 8€. At 500 units it would be just 4€, the fixed-cost share melts as output grows.

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