Can someone explain why? I do not particularly understand. The average variable cost is $5, and I need the variable cost to calculate the fixed cost
1 Answer
$\begingroup$
$\endgroup$
2
If $C(Q) = C_v(Q) + F$ is the cost function where $C_v(Q)$ is the variable cost and $F$ is the fixed cost, then
- $AC(Q) = \frac{C_v(Q) + F}{Q}$
- $AVC(Q) = \frac{C_v(Q)}{Q}$
You're given $AC(Q) = 11$, $AVC(Q) = 5$ and $Q = 100$. Can you plug in the values in the above definitions and continue?
Click on the spoiler for verification:
$F = \\\$600$
-
1$\begingroup$ Wow, didn't know about this spoiler tool! $\endgroup$– VARulleCommented Nov 2, 2022 at 11:53
-
$\begingroup$ @VARulle It exists but I am sure the temptation to reveal the spoiler makes it useless anyways haha. I have mostly seen it being used by the puzzlers. $\endgroup$ Commented Nov 3, 2022 at 5:33