If the total cost of production for 1000 widgets is $2000 and marginal cost is constant at $1,what is the average fixed cost for the 1000 widgets?
A) $2
B) $1.5
C) $1
D) $0.5

Question

Quizplus · Accepted Answer

Total cost of production for 1000 widgets is $2000, therefore the average total cost (ATC) is $2 per widget (2000/1000). 
If the marginal cost is constant at $1, then the average variable cost (AVC) is also $1 per widget. 
To find the average fixed cost (AFC), we subtract the AVC from the ATC: 
AFC = ATC - AVC 
AFC = $2 - $1 
AFC = $1 
Therefore, the answer is C) $1.

If the Total Cost of Production for 1000 Widgets Is