Refer to Table 7-4. If the output equals five watches per week, what is the average fixed cost and average variable cost of production?
A) AFC is $50 and AVC is $45
B) AFC is $9 and AVC is $10
C) AFC is $10 and AVC is $9
D) AFC is $45 and AVC is $50

Question

Quizplus · Accepted Answer

From the given table, we can see that at a production level of 5 watches per week, the total fixed cost (TFC) is $50 and the total variable cost (TVC) is $45. 
Therefore, average fixed cost (AFC) = TFC/output = $50/5 = $10 
And average variable cost (AVC) = TVC/output = $45/5 = $9. 
Thus, the correct choice is C.