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Suppose that for a particular firm the only variable input into the production process is labor and that output equals zero when no workers are hired. In addition, suppose that when four units of output are produced, the total cost is $175, and the average variable cost is $33.75. What would the average fixed cost be if ten units were produced?

Respuesta :

Answer:

the average fixed cost is $4

Step-by-step explanation:

Given data

total cost i= $175

average variable cost = $33.75

to find out

average fixed cost

solution

according to question we know that when four units of output are produced the total cost is $175 and the average variable cost is $33.75

so cost 4 unit of total cost = $175

and 4 unit of variable cost will be  $33.75 × 4 i.e $135

so we can say now fix cost is total cost - variable cost

i.e. $175 - $135 = $40

so finally avg fix cost of 10 unit is 40/10 i.e. = 4

the average fixed cost is $4