If a firm produces 8 units of output with average fixed cost=$40 and average variable cost=$25,what is its total fixed cost?
A)$320
B)$200
C)$650
D)$1,000

Question

​If a firm produces 8 units of output with average fixed cost=$40 and average variable cost=$25,what is its total fixed cost?
A)​$320
B)$200
C)$650
D)​$1,000

Quizplus · Accepted Answer

The formula for calculating total cost is:
Total Cost = Total Fixed Cost + Total Variable Cost

We know that the firm produces 8 units of output with:
Average fixed cost = $40
Average variable cost = $25

To find out the total fixed cost, we can use the following formula:
Total Fixed Cost = (Average Fixed Cost - Average Variable Cost) x Number of Units Produced

Plugging in the values given in the question:
Total Fixed Cost = ($40 - $25) x 8
Total Fixed Cost = $15 x 8
Total Fixed Cost = $120

Therefore, the total fixed cost is $320 (Choice A).

​If a Firm Produces 8 Units of Output with Average

If a Firm Produces 8 Units of Output with Average