Figure 11-7

Figure 11-7 shows the cost structure for a firm.
-Refer to Figure 11-7.When the output level is 100 units average fixed cost is
A)$10.
B)$8.
C)$5.
D)This cannot be determined from the diagram.

Question

Figure 11-7
  
Figure 11-7 shows the cost structure for a firm.
-Refer to Figure 11-7.When the output level is 100 units average fixed cost is
A)$10. 
B)$8. 
C)$5. 
D)This cannot be determined from the diagram.

Quizplus · Accepted Answer

To calculate average fixed cost, we need to divide total fixed cost by the output level. At an output level of 100 units, the total fixed cost is $800 (as seen in the diagram). Therefore, average fixed cost is $8 ($800 divided by 100 units).

Figure 11-7 Figure 11-7 Shows the Cost Structure for a Firm