Asked by Mylene Salazar on Apr 29, 2024
Verified
Refer to Table 13-8. What is the average fixed cost of producing 5 units of output?
A) $4
B) $5
C) $40
D) $44
Fixed Cost
Fixed costs are business expenses that remain unchanged regardless of the level of production or sales, such as rent, salaries, and insurance premiums.
Output
The cumulative sum of products and services generated by an economy.
Average Fixed Cost
The set expenses associated with production (not influenced by production scale) distributed over the number of items produced.
- Derive the average total cost, average fixed cost, and average variable cost from the information provided.
- Understand the impact of fixed costs on average total cost and how it changes with production levels.
Verified Answer
ZK
Zybrea KnightMay 04, 2024
Final Answer :
A
Explanation :
The average fixed cost of producing 5 units of output is calculated by dividing the total fixed cost by the number of units produced. The total fixed cost is $20, and when producing 5 units, the average fixed cost is $20 / 5 = $4.
Learning Objectives
- Derive the average total cost, average fixed cost, and average variable cost from the information provided.
- Understand the impact of fixed costs on average total cost and how it changes with production levels.