Asked by Casey Snyder on May 20, 2024
Verified
At an output of 4,AFC is
A) $200.
B) $250.
C) $500.
D) $1,000.
E) cannot be determined.
Average Fixed Cost
The cost incurred for fixed inputs (rent, salaries) divided by the quantity of output produced, which decreases as production increases.
Variable Cost
Costs that vary directly with the level of production or output, such as materials and labor, in contrast to fixed costs.
Total Cost
The complete sum of all expenses incurred by a business or individual in producing a good or service.
- Interpret the framework of cost graphs, including details on average fixed cost (AFC), average variable cost (AVC), and average total cost (ATC).
- Study the effect of production volume changes on different categories of costs.
Verified Answer
RA
Rania AssafMay 25, 2024
Final Answer :
B
Explanation :
AFC (Average Fixed Cost) is calculated as Fixed Cost divided by the quantity of output. Given a fixed cost of $1000 and an output of 4, AFC = $1000 / 4 = $250.
Learning Objectives
- Interpret the framework of cost graphs, including details on average fixed cost (AFC), average variable cost (AVC), and average total cost (ATC).
- Study the effect of production volume changes on different categories of costs.