Multiple choice

Use the following data to answer the questions: Output 0 1 2 3 4 5 6 Total Cost 240 330 410 480 540 610 660 The average fixed cost of 2 units of output is ______.

  1. 80

  2. 85

  3. 120

  4. 205
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Total Cost at 2 units is 410. Fixed Cost is Total Cost at 0 units, which is 240. Average Fixed Cost = Fixed Cost / Quantity = 240 / 2 = 120.

AI explanation

Total fixed cost is determined by the total cost at zero output, which is 240. Average fixed cost is found by dividing this total fixed cost by the number of units produced. For 2 units of output, the average fixed cost is 240 divided by 2, which gives 120.

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