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    Question

    With fixed costs of $400, a firm has average total costs

    of $3 and average variable costs of $2.50. Its output is:
    A 200 units Correct Answer Incorrect Answer
    B 400 units Correct Answer Incorrect Answer
    C 800 units Correct Answer Incorrect Answer
    D 1,600 units. Correct Answer Incorrect Answer

    Solution

    ATC = AFC + AVC. AFC = TFC/Q. Put the values to get output.

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