Question

At 100 units of output, total cost is $10,000 and variable cost is $6,000. What does average fixed cost equal at 100 units?

Answer 1

$40

Step-by-step explanation:

Total costs are comprised of total variable costs plus total variable costs. i.e., total costs = variable cost +fixed costs

in this situation,

$10,000 = $6,000 + fixed costs

Fixed costs = $10,000 -$6000

fixed costs = $4000

Average fixed cost is the fixed cost divided by total output

=$4000/100

= $40