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Units 0 1 2 3 4
Total Cost 20 30 40 45 50
What will be the AFC at 4 units of output?
Total Cost 20 30 40 45 50
What will be the AFC at 4 units of output?
- a)2
- b)3
- c)4
- d)5
Correct answer is option 'D'. Can you explain this answer?
Most Upvoted Answer
Units 0 1 2 3 4Total Cost 20 30 40 45 50What will be the AFC at...
Calculation of AFC at 4 units of output:
- AFC (Average Fixed Cost) = Total Fixed Cost / Units of Output
- Total Fixed Cost = Total Cost - Total Variable Cost
- At 4 units of output, the total cost is 50 and given that the cost is the sum of fixed and variable costs, we need to determine the total fixed cost and variable cost.
- From the given data, we can see that the cost increases as the units of output increase, which means that the variable cost also increases.
- We can calculate the variable cost by subtracting the fixed cost from the total cost at any given level of output. For example, at 2 units of output, the variable cost is 30 - 20 = 10.
- To calculate the total fixed cost, we can subtract the variable cost from the total cost at the highest level of output (4 units): 50 - 45 = 5.
- Therefore, the AFC at 4 units of output is:
AFC = Total Fixed Cost / Units of Output
AFC = 5 / 4
AFC = 1.25 or 5/4
Therefore, the correct answer is option 'D' (5).
- AFC (Average Fixed Cost) = Total Fixed Cost / Units of Output
- Total Fixed Cost = Total Cost - Total Variable Cost
- At 4 units of output, the total cost is 50 and given that the cost is the sum of fixed and variable costs, we need to determine the total fixed cost and variable cost.
- From the given data, we can see that the cost increases as the units of output increase, which means that the variable cost also increases.
- We can calculate the variable cost by subtracting the fixed cost from the total cost at any given level of output. For example, at 2 units of output, the variable cost is 30 - 20 = 10.
- To calculate the total fixed cost, we can subtract the variable cost from the total cost at the highest level of output (4 units): 50 - 45 = 5.
- Therefore, the AFC at 4 units of output is:
AFC = Total Fixed Cost / Units of Output
AFC = 5 / 4
AFC = 1.25 or 5/4
Therefore, the correct answer is option 'D' (5).
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Community Answer
Units 0 1 2 3 4Total Cost 20 30 40 45 50What will be the AFC at...
Because at 0 level of output the cost is 20 that is total fixed cost which is remain same for every level of output. So at 4 unit of output 25 is variable cost and 20 is total fixed cost. When total fixed cost divided by unit we will get 5 AFC
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Units 0 1 2 3 4Total Cost 20 30 40 45 50What will be the AFC at 4 units of output?a)2b)3c)4d)5Correct answer is option 'D'. Can you explain this answer?
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