(Table: Competitive Firm) Refer to the table that shows therevenue and cost schedules for a competitive firm. What is theaverage fixed cost at the profit maximizing quantity?
A)$54.30
B)$4.28
C)$50
D)$80

Question

(Table: Competitive Firm) Refer to the table that shows therevenue and cost schedules for a competitive firm. What is theaverage fixed cost at the profit maximizing quantity?
A)$54.30 
B)$4.28 
C)$50 
D)$80

Quizplus · Accepted Answer

To find the average fixed cost, we need to divide total fixed costs (which is equal to the fixed cost per unit multiplied by the quantity produced) by the quantity produced. At the profit maximizing quantity (where MR=MC), the quantity produced is 12 units. 
Total fixed cost = 10 * 12 = 120
Average fixed cost = 120/12 = $10 
Therefore, the correct answer is B) $4.28.

(Table: Competitive Firm) Refer to the Table That Shows Therevenue