CA Foundation P4 · Chapter 3 · Question 9 of 15
A firm's total fixed cost is Rs. 600. At an output of 50 units, its total variable cost is Rs. 1,400. Its average total cost at this output is:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: A) Rs. 40
Explanation
TC = TFC + TVC = 600 + 1,400 = Rs. 2,000. ATC = TC/Q = 2,000/50 = Rs. 40. Equivalently AFC = 600/50 = 12 and AVC = 1,400/50 = 28, so ATC = 12 + 28 = 40.
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