Ernie's Earmuffs produces 200 earmuffs per year at a total cost of $2,000 and $400 of this cost is fixed.What is Ernie's average variable cost?
A)$400
B)$8
C)$2
D)$2,400
E)$1,600

Question

Quizplus · Accepted Answer

The average variable cost is calculated by subtracting the total fixed cost from the total cost and then dividing by the quantity produced. So, $2,000 - $400 = $1,600 (total variable cost). Then, $1,600 / 200 earmuffs = $8 per earmuff.

Ernie's Earmuffs Produces 200 Earmuffs Per Year at a Total