You operate a factory that produces beach towels. Your current level of output e

Question

You operate a factory that produces beach towels. Your current level of output equals 2000 towels per week. Your weekly variable cost equals $8000. If your total cost each week equals $9000, what can you conclude about the fixed costs of production?
A) that the total cost equals $17.000 B) that the total fixed cost equals $8 per towel C) that the average fixed cost equals 50 cents per towel D) that the average fixed cost equals $1000 E) that the average fixed cost equals $50 per towel You operate a factory that produces beach towels. Your current level of output equals 2000 towels per week. Your weekly variable cost equals $8000. If your total cost each week equals $9000, what can you conclude about the fixed costs of production? You operate a factory that produces beach towels. Your current level of output equals 2000 towels per week. Your weekly variable cost equals $8000. If your total cost each week equals $9000, what can you conclude about the fixed costs of production?
A) that the total cost equals $17.000 B) that the total fixed cost equals $8 per towel C) that the average fixed cost equals 50 cents per towel D) that the average fixed cost equals $1000 E) that the average fixed cost equals $50 per towel

Explanation / Answer

Total costs = fixed costs + variable costs

9000 = 8000 + Fixed costs

Fixed costs =9000-8000 = 1000

Average Fixed costs =Fixed costs/Q = 1000/2000 = 0.5 or 50 cents per towel

C) that the average fixed cost equals 50 cents per towel

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