Question

A firm produces 400 units of output at a total cost of $1,200. If fixed costs are $200,a. average fixed cost is $2. b. average variable cost is $2.50. c. average total cost is $4. d. average total cost is $

Answer 1

Answer:

The correct answer is option b.

Explanation:

Here, it is given that the quantity produced is 400 units.

The total fixed costs is $1200.

Out of which, total fixed costs is $200.

So, the total variable cost is $(1200-200)=$1000.

Average fixed costs

= $\frac{TFC}{Q}$

=$\frac{200}{400}$

=0.5

Average variable costs

=$\frac{TVC}{Q}$

=$$\frac{1000}{400}$

=$2.5

Average total cost

=$\frac{TC}{Q}$

=$$\frac{1200}{400}$

=$3

So, the average total cost is $3, the average fixed cost is $0.5 and the average variable cost is $2.5.

Answer 2

b. The average variable cost is $ 2.50.

The total cost is $ 1,200

$ 200 Fixed Cost

Produces 400 units

= $ 2.5

Further Explanation

In economics, fixed costs are business expenses that don't rely upon the extent of products or services produced by the business. These expenses are associated with time, like salaries or rental expenses that are paid monthly, and are often remarked as additional expenses.

Based on variability, costs are classified into three categories, namely fixed costs, variable costs, and semi-variable costs. Fixed costs, because the name suggests, are total costs, despite the number of output produced. While variable costs vary betting on the number of output produced. Semi-variable costs are varieties of costs, which have the characteristics of mixing these two costs.

In trying to find a break-even point or BEP you want to be ready to distinguish two varieties of costs, namely fixed costs and variable costs. Fixed costs are costs that don't change with changes within the level of activity within the short term.

Now, from a number of the items mentioned above, it's clear that the 2 costs are substantially con to every other, and that they aren't identical in any case. it's important for you to grasp the difference between these two things for the event of your business.

Learn More

Fixed Cost  https://brainly.com/question/13016117

Variable Cost https://brainly.com/question/13016117

Details

Class: College

Subject: Business

Keyword: fixed, variable, cost