If total fixed cost is $10,000 and average variable cost is constant at $1.00 per unit over the...

Question:

If total fixed cost is $10,000 and average variable cost is constant at $1.00 per unit over the relevant range of output, what will be the average total cost to produce 10,000 units?

A. $0.20

B. $2.00

C. $5.00

D. $1.00

Total Fixed Cost

Total fixed cost is an expense that any company incurs if engaged, especially in the production of manufactured items. This kind of expense can be the rent paid by the companies to the landowners every month, and the total fixed cost does not necessarily change with the change in production.

Answer and Explanation: 1

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The correct option is B): $2.00

Reason: Average fixed cost can be found by dividing total fixed cost, which is $10,000, by the total number of units...

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Average Cost Vs. Total Cost: Making Production Decisions in the Short-Run

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Chapter 4 / Lesson 8
12K

Learn what the average cost of a firm is and how it differs from total cost. Understand the distinction between short run and long run average total cost.


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