Question

The average total cost of producing cell phones in a factory is R300 at the current output level of 100
per week. If total fixed cost is R20 000 per week, then:
A. average variable cost is R100.
B. average fixed cost is R400.
C. total cost is R10 000.
D. total variable cost is R30 000.
E. marginal cost is R300.

Answer 1

Answer to Question #90615, Economics / Microeconomics

(A) Average variable cost is R100

Total cost = ATC * Q = 300 * 100 = 3000

Total variable cost = TC - TFC = 30000 - 20000 = 10000

$$A V C = \frac {T V C}{Q} = \frac {1 0 0 0 0}{1 0 0} = R 1 0 0$$

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