A perfectly competitive firm sells 15 units of output at the going market price of $10.Suppose its average fixed cost is $15 and its average variable cost is $8.Its contribution margin (i.e.,contribution to fixed cost)is
A)$30.
B)$150.
C)$105.
D)Cannot be determined from the above information

Question

Quizplus · Accepted Answer

The contribution margin is calculated as (Price - Average Variable Cost) * Quantity. Here, it is ($10 - $8) * 15 = $30.

A Perfectly Competitive Firm Sells 15 Units of Output at the Going