- **Calculation of Average Fixed Cost (AFC) for 2 units**
**Given Table:**
| Quantity | Total Fixed Cost ($) | Total Variable Cost ($) | Total Cost ($) | Average Fixed Cost ($) |
|----------|-----------------------|-------------------------|----------------|-----------------------|
| 0 | 20 | 0 | 20 | - |
| 1 | 20 | 10 | 30 | 20 |
| 2 | 20 | 18 | 38 | 10 |
| 3 | 20 | 24 | 44 | 6.67 |
| 4 | 20 | 30 | 50 | 5 |
| 5 | 20 | 40 | 60 | 4 |
**Calculation:**
- AFC is calculated by dividing the total fixed cost by the quantity of output.
- AFC = Total Fixed Cost / Quantity
**For 2 units:**
- AFC = 20 / 2
- AFC = 10
**Explanation:**
- The Average Fixed Cost (AFC) for producing 2 units is $10. This means that for each unit produced, $10 of fixed costs are incurred.
- As the quantity of output increases, the AFC decreases because the fixed costs are spread over a larger number of units.
- AFC provides insights into the cost structure of a business and helps in determining the profitability of producing additional units.
- Understanding AFC is crucial for making pricing decisions and evaluating the financial performance of a company.