Asked by Ayush Patel on Sep 23, 2024
Verified
If the firm produces 5 units,average fixed costs equals
A) $5
B) $10
C) $15
D) $20
Average Fixed Costs
The cost incurred by a company that does not change with the level of goods or services produced, averaged over a period.
Units
refers to a single, quantified piece of something that is used for measurement or as a standard for exchange.
- Understand the processes involved in determining average variable cost (AVC), average fixed cost (AFC), and average total cost (ATC), and their significance in the scrutiny of production costs.
Verified Answer
KG
Katie Graber2 days ago
Final Answer :
B
Explanation :
Average fixed costs decrease as output increases because the total fixed costs are spread over a larger number of units. If the firm's total fixed costs are $50 (as implied by the choices given for different levels of output), producing 5 units would mean the average fixed cost per unit is $50 / 5 = $10.
Learning Objectives
- Understand the processes involved in determining average variable cost (AVC), average fixed cost (AFC), and average total cost (ATC), and their significance in the scrutiny of production costs.