Refer to Table 8.1.Assume the wage rate is $10 and the firm has $1,000 in unavoidable fixed cost.What is the average fixed cost of producing 93 units of output?
A) $11.40
B) $10.75
C) $0.65
D) $10.00

Question

Refer to Table 8.1.Assume the wage rate is $10 and the firm has $1,000 in unavoidable fixed cost.What is the average fixed cost of producing 93 units of output? 
A) $11.40 
B) $10.75 
C) $0.65 
D) $10.00

Quizplus · Accepted Answer

To calculate the average fixed cost (AFC), we divide the total fixed cost (TFC) by the quantity produced (Q). 
TFC = $1,000 
Q= 93 
AFC = TFC/Q = $1,000/93 = $10.75.