If a Firm Produces 20 Units of Output and Incurs

question 191

Multiple Choice

If a firm produces 20 units of output and incurs a total cost of $1,000 and a variable cost is $700, calculate the firm's average fixed cost of production if it expands output to 25 units.

• A)$300
• B)$15
• C)$12
• D)It is impossible to determine without additional information.

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Definitions:

Franchise

A business model that allows one to use another's established brand and operating systems in exchange for a fee and ongoing royalties.

Cable Television

A system for delivering television programming to viewers via radio frequency signals transmitted through coaxial cables or light pulses through fiber-optic cables.

Marginal Revenue

The extra profit gained from selling one more unit of a product or service.

Total Revenue

The grand total of funds acquired by a company through the sale of its goods or the delivery of its services within a predetermined interval.