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)$1.50
C)$1
D)$0.50

Question

Quizplus · Accepted Answer

Total cost of production for 1000 widgets is $2000 and the marginal cost is constant at $1. We can calculate the total variable cost as follows:

Total variable cost = Total cost - Total fixed cost
Total variable cost = $2000 - Total fixed cost

Since the marginal cost is constant at $1 and there are 1000 widgets, we know that the total variable cost is $1000. Therefore:

$1000 = $2000 - Total fixed cost
Total fixed cost = $1000

Average fixed cost is simply the total fixed cost divided by the number of widgets produced:

Average fixed cost = Total fixed cost / Number of widgets produced
Average fixed cost = $1000 / 1000
Average fixed cost = $1

Therefore, the answer is C) $1.

If the Total Cost of Production for 1000 Widgets Is