ECONOMICS
COMPETITION AND MARKET STRUCTURES
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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$4 per unit
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$5 per unit
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$3 per unit
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$2 per unit
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Detailed explanation-1: -Average cost (AC), also known as average total cost (ATC), is the average cost per unit of output. To find it, divide the total cost (TC) by the quantity the firm is producing (Q).
Detailed explanation-2: -We can calculate the average cost by dividing the total cost by the total output quantity. Average Cost equals the per-unit cost of production which is calculated by dividing the total cost by the total output. Total cost means the sum of all costs, including the fixed and variable costs.
Detailed explanation-3: -What is the total cost of production of 20 units, if fixed cost is Rs. 5, 000 and variable cost is Rs. 2/-? a)5400b)5040c)4960d)5020Correct answer is option ‘B’.
Detailed explanation-4: -When 4 units are produced, the total cost incurred is $100. Removing the total fixed cost from this, the total variable cost when 4 units are produced will be $100−$20=$80 $ 100 − $ 20 = $ 80 . So, the average variable cost is 804=$20 80 4 = $ 20 .