Ramblin' Randy's Dude Ranch's daily total cost of accommodating overnight guests is given by TC = 100 + 5Q.On the basis of this information,the average fixed cost,when there are 25 overnight guests,is:
A) $4.
B) $5.
C) $6.
D) $7.
E) $9.

Question

Quizplus · Accepted Answer

Average Fixed Cost (AFC) is calculated as the total fixed cost (TFC) divided by the quantity (Q) of output. Here, the total cost (TC) is given by TC = 100 + 5Q, where 100 represents the fixed cost (since it does not vary with Q) and 5Q represents the variable cost. For 25 overnight guests, AFC = TFC / Q = 100 / 25 = $4.

Ramblin' Randy's Dude Ranch's Daily Total Cost of Accommodating Overnight