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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?


  1. Rs 6250

  2. Rs 12500

  3. Rs 625

  4. Rs 1250


Solution

The correct option is A

Rs 6250


At 250 units of output, TR=TC.
Price= Slope of TR curve = Rs 50
Suppose fixed cost is F.
Then, TC=F+250×25TR=250×50TR=TCF+250×25=250×50F=250×25= Rs 6250

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