If the total cost of producing 20 units of output is $1,000 and the average variable cost is $35, what is the firm's average fixed cost at that level of output?
A)$65
B)$50
C)$15
D)It is impossible to determine without additional information.

Question

Quizplus · Accepted Answer

Total cost (TC) = $1,000  
Output (Q) = 20 units  
Average variable cost (AVC) = $35

We know that: 
Total cost = Total fixed cost + Total variable cost 
Total variable cost = AVC x Q

Substituting the given values: 
$1,000 = Total fixed cost + ($35 x 20) 
$1,000 = Total fixed cost + $700 
Total fixed cost = $1,000 - $700 
Total fixed cost = $300

Therefore, the average fixed cost (AFC) at 20 units of output is:

AFC = Total fixed cost / Output 
AFC = $300 / 20 
AFC = $15

So, the answer is (C) $15.

If the Total Cost of Producing 20 Units of Output