Refer to Table 1319 What is the average fixed cost of produc

Refer to Table 13-19. What is the average fixed cost of producing 430 units of output?

Table 13-19 Labor Output Marginal Product Variable Cost Fixed Cost 0 0 -- $0 $5 1 100 100 $5 $5 2 250 $10 $5 3 350 $15 $5 4 50 $20 $5 5 25 $25 $5 6 430 $30 $5

Solution

AFC = (Total fixed cost / quantity )

AFC of producing 430 units of output = (TFC of producing 430 units of output / 430) = $(5/430) = $ 0.012