McqMate
| Q. |
If the average total cost is Rs.54, total fixed cost is Rs.45000 and quantity produced is 2500 units, find the average variable costs (in Rs.) of the firm - |
| A. | 24 |
| B. | 18 |
| C. | 36 |
| D. | 60 |
| Answer» C. 36 | |
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Explanation: The standard method of calculating average variable cost is to divide total variable cost by the quantity, illustrated by this equation : Average Variable Cost = Total Variable Cost/ Quantity of Output An alternative specification for average variable cost is found by subtracting average fixed cost from average total cost Average Variable Cost = Average Total Cost - Average Fixed CostAccording to question, Average Total Cost = 45000/2500 = 18 So Average Variable Cost = 54 - 18= 36 |
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