Question

You run a small business producing candles. This month your total cost is $10,000, your variable cost is $5,000, and your output is 5,000 candles. Given this information, your:

Answer 1

Answer: b. Average fixed cost is $1.

Step-by-step explanation:

The Average Fixed cost is calculated by dividing the fixed costs of production by the units produced.

Fixed costs = Total costs - Variable costs

= 10,000 - 5,000

= $5,000

Average fixed cost = 5,000/5,000

= $1

Option b is correct.