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Karen runs a print shop that makes posters for large companies. It is a very competitive business. The market price is currently $1.00 per poster. She has fixed costs of $500.00. Her variable costs are $1,500 for the first thousand posters, $1,200 for the second thousand, and then $800 for each additional thousand posters.What is her ATC per poster if she prints 1,000?

a. What is her ATC per poster if she prints 2,000?
b. What is her ATC per poster if she prints 10,000?

Respuesta :

adelekeademolu

Answer:

(a) $ 1.60

(b) $ 0.96

Step-by-step explanation:

(a) Cost of printing 2000 posters = Cost of first thousand + cost of second thousand = 1500 + 1200 = 2700

Total cost = 2700 + 500 = 3200

Average Total Cost = Total cost/Number of posters = 3200/2000 = $ 1.60

(b) Cost of printing 10000 posters = Cost of first thousand + cost of second thousand + (800 × Number of additional thousands)

Number of additional thousands = (10000 - 1000 - 1000)/1000 = 8000/1000 = 8

Cost of printing 2000 posters = 1500 + 1200 + (800 × 8) = 2700 + 6400 = 9100

Total cost = 9100 + 500 = 9600

Average Total Cost = Total cost/Number of posters = 9600/10000 = $ 0.96

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