The table below contains information about a firm's current production:
\begin{tabular}{ll}
Variable & Value \
\hline Quantity & 100 \
Total costs & $\$ 18,000$ \
Variable costs & $\$ 11,000$
\end{tabular}

What is the firm's average fixed cost for producing 100 units?

Choose 1 answer:
(A) $\$ 180$
(B) $\$ 1000$
(C) $\$ 290$
(D) $\$ 110$
(E) $\$ 70$

Question

The table below contains information about a firm's current production:
\begin{tabular}{ll} 
Variable & Value \
\hline Quantity & 100 \
Total costs & $\$ 18,000$ \
Variable costs & $\$ 11,000$
\end{tabular}

What is the firm's average fixed cost for producing 100 units?

Choose 1 answer:
(A) $\$ 180$
(B) $\$ 1000$
(C) $\$ 290$
(D) $\$ 110$
(E) $\$ 70$

Accepted Answer

∻Solution∻ ‖ a ⋮ Definition of Average Fixed Cost: Average Fixed Cost (AFC) is calculated by dividing the total fixed costs (TFC) by the quantity of output produced. ‖ ‖ b ⋮ Calculation of Total Fixed Costs: Total Fixed Costs (TFC) can be found by subtracting the total variable costs (TVC) from the total costs (TC). $$ TFC = TC - TVC $$ Given: $$ TC = \$18,000 $$ $$ TVC = \$11,000 $$ $$ TFC = 18,000 - 11,000 = \$7,000 $$ ‖ ‖ c ⋮ Calculation of Average Fixed Cost: Now, we divide the total fixed costs by the quantity to find the average fixed cost. $$ AFC = \frac{TFC}{Q} $$ Given: $$ Q = 100 $$ $$ AFC = \frac{7,000}{100} = \$70 $$ ‖ ∻Answer∻ ⚹ (E) $70 ⚹ ∻Key Concept∻ ⚹ Average Fixed Cost (AFC) ⚹ ∻Explanation∻ ⚹ The average fixed cost is calculated by dividing the total fixed costs by the quantity of output produced. In this case, the total fixed costs are $7,000 and the quantity is 100 units, resulting in an average fixed cost of $70 per unit. ⚹◊What is the formula to calculate average fixed cost in Microeconomics⍭ Generate me a similar question◊

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