What should the firm's fixed cost of production, when average variable cost is $R s . 50$ per unit, total cost of production is $R s . 500$ , and only $2$ units of output are produced?

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Solution

$T C = R s . 500;$
$A V C = R s . 50;$
$O u t p u t = 2 u n i t s$
$T V C = A V C \times O u t p u t$
$= R s . 50 \times 2 = R s . 100$
$T C = T F C + T V C$
$500 = T F C + 100$
$T F C = 500 - 100$
Thus, Fixed cost $= R s . 400$ .

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What should the firm's fixed cost of production, when average variable cost is Rs.50 per unit, total cost of production is Rs.500, and only 2 units of output are produced?

TC=Rs.500;AVC=Rs.50;Output=2 unitsTVC=AVC×Output=Rs.50×2=Rs.100TC=TFC+TVC500=TFC+100TFC=500−100Thus, Fixed cost =Rs.400.

What should the firm's fixed cost of production, when average variable cost is $R s . 50$ per unit, total cost of production is $R s . 500$ , and only $2$ units of output are produced?

$T C = R s . 500;$
$A V C = R s . 50;$
$O u t p u t = 2 u n i t s$
$T V C = A V C \times O u t p u t$
$= R s . 50 \times 2 = R s . 100$
$T C = T F C + T V C$
$500 = T F C + 100$
$T F C = 500 - 100$
Thus, Fixed cost $= R s . 400$ .