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Question

The numbers of units produced by a firm and the corresponding costs are tabulated below.

No. of unitsTotal cost100Rs 2000250Rs 3500

Assuming constant variable cost per unit, calculate the AFC for 100 units.


A

Rs 10

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B

Rs 20

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C

Rs 100

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D

Rs 1000

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Solution

The correct option is A

Rs 10


Let the fixed cost be F and the variable cost per unit be v.

F +100 v = Rs 2000
F + 250 v = Rs 3500

On solving, we get F = 1000 =TFC and v = 10 = AVC
Now, AFC = TFC / 10 = 1000/100 = Rs 10


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