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A firm producing 15 units of output has average cost of 250 and 125 as per unit cost for fixed factors of production then average variable cost will be?
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A firm producing 15 units of output has average cost of 250 and 125 as...
Calculation of Average Variable Cost:

  • Given, Average Cost = 250 and Per Unit Cost for Fixed Factors of Production = 125

  • Therefore, Average Variable Cost = Average Cost - Per Unit Cost for Fixed Factors of Production

  • Substituting the given values, Average Variable Cost = 250 - 125 = 125



Explanation:

  • Average cost is the total cost of production divided by the total output. It includes both variable and fixed costs.

  • Per unit cost for fixed factors of production is the cost incurred for the fixed factors of production such as rent, salaries, etc. It does not vary with the level of output.

  • Therefore, to calculate the average variable cost, we need to subtract the per unit cost for fixed factors of production from the average cost.

  • In this case, the average variable cost is 125, which means that for every unit of output produced, the variable cost incurred by the firm is 125.

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A firm producing 15 units of output has average cost of 250 and 125 as per unit cost for fixed factors of production then average variable cost will be?
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