Multiple Choice
If average total cost is $50, quantity produced is 10 and total fixed cost $100, what is the total variable cost for the output of 10?
10. The Costs of Production
Graphing Costs
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Based on the graph below, at a quantity of 100, AFC is equal to:
A
$50
B
$200
C
$250
D
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Verified step by step guidance1
Understand the cost curves: The graph shows the Marginal Cost (MC), Average Total Cost (ATC), and Average Variable Cost (AVC) curves. The Average Fixed Cost (AFC) is not directly shown but can be calculated.
Recall the relationship between costs: ATC = AFC + AVC. Therefore, AFC can be found by subtracting AVC from ATC at a given quantity.
Identify the values at quantity 100: From the graph, determine the values of ATC and AVC at a quantity of 100. These values are represented by the points where the vertical line at quantity 100 intersects the ATC and AVC curves.
Calculate AFC: Use the formula AFC = ATC - AVC. Substitute the values of ATC and AVC obtained from the graph at quantity 100 into this formula to find AFC.
Interpret the options: Compare the calculated AFC value with the given options ($50, $200, $250) to determine which one matches the calculated AFC.
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