Question

Use the data in the following table to answer the question.

Units Total costs

0 100

1 110

2 130

3 166

The average fixed cost of the third unit is

Answer 1

Solution:

The Average Fixed Cost (AFC) is calculated by dividing total costs by the quantity being produced:

AFC = $\frac{Total Costs}{Quantity}$

The AFC of the third unit = $\frac{166}{3} = 55.33$

The AFC of the third unit = 55.33