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With fixed cost of Rs. 400, a firm has an average total cost of Rs. 3 and an average variable cost of Rs. 2.50. Its output is _________.
- a)200 units
- b)400 units
- c)800 units
- d)1600 units
Correct answer is option 'C'. Can you explain this answer?
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Most Upvoted Answer
With fixed cost of Rs. 400, a firm has an average total cost of Rs. 3 ...
Average Total Costs = Rs.3
Average Variable Cost of Rs. 2.50
Average total costs = Average variable cost + Average Fixed Cost
Rs.3 = Rs.2.50 + AFC
AFC = Rs.3 - Rs.2.5
AFC = Rs.0.5
Average Fixed Cost = Total Fixed Cost/Total Quantity
Fixed Cost = Rs.400
AFC = Rs.0.5
Total No. of Quantity = Total Fixed Cost/AFC
Total No. of Quantity = Rs.400/0.5
Total No. of Quantity = 800 units
correct answer is 800 units.
correct answer is 800 units.
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With fixed cost of Rs. 400, a firm has an average total cost of Rs. 3 ...
Given information:
- Fixed cost (FC) = Rs. 400
- Average total cost (ATC) = Rs. 3
- Average variable cost (AVC) = Rs. 2.50
To find: Output level
Let's break down the problem step by step to find the output level.
1. Calculate the total cost (TC):
- TC = ATC * Output
- FC + VC = ATC * Output
- Rs. 400 + VC = Rs. 3 * Output
2. Calculate the variable cost (VC):
- VC = AVC * Output
- Rs. 2.50 * Output
3. Substitute the value of VC in the TC equation:
- Rs. 400 + Rs. 2.50 * Output = Rs. 3 * Output
4. Simplify the equation to solve for Output:
- Rs. 400 = Rs. 0.50 * Output
- Output = Rs. 400 / Rs. 0.50
- Output = 800 units
Therefore, the firm's output level is 800 units.
- Fixed cost (FC) = Rs. 400
- Average total cost (ATC) = Rs. 3
- Average variable cost (AVC) = Rs. 2.50
To find: Output level
Let's break down the problem step by step to find the output level.
1. Calculate the total cost (TC):
- TC = ATC * Output
- FC + VC = ATC * Output
- Rs. 400 + VC = Rs. 3 * Output
2. Calculate the variable cost (VC):
- VC = AVC * Output
- Rs. 2.50 * Output
3. Substitute the value of VC in the TC equation:
- Rs. 400 + Rs. 2.50 * Output = Rs. 3 * Output
4. Simplify the equation to solve for Output:
- Rs. 400 = Rs. 0.50 * Output
- Output = Rs. 400 / Rs. 0.50
- Output = 800 units
Therefore, the firm's output level is 800 units.
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With fixed cost of Rs. 400, a firm has an average total cost of Rs. 3 and an average variable cost of Rs. 2.50. Its output is _________.a)200 unitsb)400 unitsc)800 unitsd)1600 unitsCorrect answer is option 'C'. Can you explain this answer?
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