The table given below shows the total cost of producing different units of the output by a competitive firm. Table 7.4

- In Table 7.4,at 4 units of output,
A)AFC = $6.25 and AVC = $10
B)AFC = $6.25 and AVC = $40
C)AFC = $40 and AVC = $6.25
D)AFC = $25 and AVC = $40
E)AFC and AVC cannot be determined from the information provided.

Question

The table given below shows the total cost of producing different units of the output by a competitive firm. Table 7.4

- In Table 7.4,at 4 units of output,
A)AFC = $6.25 and AVC = $10 
B)AFC = $6.25 and AVC = $40 
C)AFC = $40 and AVC = $6.25 
D)AFC = $25 and AVC = $40 
E)AFC and AVC cannot be determined from the information provided.

Quizplus · Accepted Answer

AFC is calculated as TFC/Q, where TFC is total fixed cost and Q is the quantity of output produced. At 4 units of output, TFC is $25 and Q is 4, so AFC = $25/4 = $6.25. AVC is calculated as TVC/Q, where TVC is total variable cost and Q is the quantity of output produced. At 4 units of output, TVC is $40 and Q is 4, so AVC = $40/4 = $10.

The Table Given Below Shows the Total Cost of Producing