Question

The TR curve meets the TC curve at 250 units of output. The slope of the TR curve is Rs 50. If the average variable cost per unit is Rs 25 at 250 units of output, what is the total fixed cost?

• A. Rs 625
• B. Rs 1250
• C. Rs 6250
• D. Rs 12500

Answer 1

The correct option is C

Rs 6250

At 250 units of output, TR=TC.
Price= Slope of TR curve = Rs 50
Suppose fixed cost is F.
$Then,TC=F+250\times 25TR=250\times 50TR=TC\Rightarrow F+250\times 25=250\times 50\Rightarrow F=250\times 25=Rs6250$