Question

Output Total Cost 0 $380 1 400 2 450 3 530 4 640 5 780 What is the average fixed cost of the 2nd unit of output?a. $65.b. $110.c. $140.d. $160.

Answer 1

Answer:

$190

Explanation:

In the case when the output is zero that means total cost is equivalent to the total fixed cost also the total fixed cost not based on the output level i.e. it is constant for all the level of output

Since the total fixed cost is $380

And, the average fixed cost is equivalent to the total fixed cost i.e. divided by the output

So here the average fixed cost would be

= $380 ÷ 2

= $190

This is the answer but the same is not given in the options