Question

Output Total Cost 0 $24 1 33 2 41 3 48 4 54 5 61 6 69 Refer to the above data. The average fixed cost of producing 3 units of output is: Hint: Look at the fixed cost of producing 0 units of output

Answer 1

Answer:

$8

Explanation:

Fixed cost is the cost that does not vary with output. It is the cost incurred even if output it zero - if no unit of output is produced.

fixed cost = average fixed cost x output

The fixed cost is $24. this is the cost incurred when output is zero

Average fixed cost = $24/3 = $8