Given that FC = N500, VC = N1,500, and Q = 50 units. Find the average cost of the product.
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Correct Answer: Option B
Explanation:
The Average Cost is the per unit cost of production obtained by dividing the total cost (TC) by the total output (Q). Thus we have;
Average cost = Total cost Total output(quantity)
Total cost = fixed cost + variable cost
Average cost = 500 + 1500 50
2000 50 = 40
The Average Cost is the per unit cost of production obtained by dividing the total cost (TC) by the total output (Q). Thus we have;
Average cost = Total cost Total output(quantity)
Total cost = fixed cost + variable cost
Average cost = 500 + 1500 50
2000 50 = 40