For Firm A, when four units of output are produced, the total cost is $175 and the average variable cost is $33.75. What would the average fixed cost be if the units were produced?
Solution -
Total cost = 175
Total variable cost 4 units
= 33.75*4
=135
Now Calculate
TFC = TC - TVC
= 175 -135
=40
Now Calculate
Average fixed cost of = 40/10
= $4
For Firm A, when four units of output are produced, the total cost is $175 and...
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