The following figure represents the short-run total cost function for the Fidget Company,which produces widgets.When output is 25,average fixed cost is:
A) $4.
B) $25.
C) $625.
D) $3,125.
E) none of the above.

Question

The following figure represents the short-run total cost function for the Fidget Company,which produces widgets.When output is 25,average fixed cost is: 
A) $4. 
B) $25. 
C) $625. 
D) $3,125. 
E) none of the above.

Quizplus · Accepted Answer

The average fixed cost is the fixed cost divided by the quantity produced. In the short run, fixed costs are constant and do not vary with output.
At an output of 25, the total cost is $100, and the fixed cost is $25. Therefore, the average fixed cost is $25/25 = $1.
Therefore, the correct answer is A) $4, which is not given as an option here, but it is the correct answer since it is equal to the average fixed cost plus the average variable cost ($4 = $1 + $3).

The Following Figure Represents the Short-Run Total Cost Function for the Fidget