Fixed cost is a type of cost that remains constant regardless of the level of output produced.


The formula for calculating average fixed cost is as follows:

Average Fixed Cost = Total Fixed Cost / Quantity of Output


Assuming the total fixed cost is $100 and the quantity of output is 2 units, we can calculate the average fixed cost as follows:

Average Fixed Cost = Total Fixed Cost / Quantity of Output
Average Fixed Cost = $100 / 2 units
Average Fixed Cost = $50 per unit

Therefore, the average fixed cost for 2 units output is $50.


Fixed cost is a type of cost that does not vary with the level of output produced. Examples of fixed costs include rent, salaries, and insurance premiums. These costs are incurred regardless of the level of production.

Average fixed cost is the fixed cost per unit of output. It is calculated by dividing the total fixed cost by the quantity of output produced. The formula for average fixed cost is:

Average Fixed Cost = Total Fixed Cost / Quantity of Output

In the example given above, the total fixed cost is $100 and the quantity of output is 2 units. Therefore, the average fixed cost is calculated as follows:

Average Fixed Cost = $100 / 2 units
Average Fixed Cost = $50 per unit

This means that for every unit of output produced, $50 of fixed cost is incurred. As the quantity of output increases, the average fixed cost decreases, as the fixed cost is spread over a larger number of units.