Given that FC = N500, VC = N1,500, and Q = 50 units. Find the
ECONOMICS
JAMB 2014
Given that FC = N500, VC = N1,500, and Q = 50 units. Find the average cost of the product.
- A. N30
- B. N40
- C. N10
- D. N20
Correct Answer: B. N40
Explanation
The Average Cost is the per unit cost of production obtained by dividing the total cost (TC) by the total output (Q). Thus we have; Average cost = Total cost ÷ Total output(quantity) Total cost = fixed cost + variable cost Average cost = 500 + 1500 ÷ 50 2000 ÷ 50 = 40
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