Question

The average fixed cost at 5 units of output is Rs. 20. Average variable cost at 5 units of output is Rs. 40. Average cost of producing 5 units is: a) Rs. 20 (b) Rs. 40 (c) Rs.56 (d) Rs.60

Answer 1

Answer:

(c) 56

Explanation:

perffer Sandeep Garg and Introductory Macroeconomics

for class 12

Answer 2

The average cost of producing 5 units is Rs. 60

Given:

Average fixed cost - Rs. 20 for 5 units

Average variable cost - Rs. 40 for 5 units

To find:

The average cost of producing 5 units

Solution:

Average fixed cost - Rs. 20

Average variable cost - Rs. 40

Outputs - 5 units

$Average \: cost \: of \: production = \frac{Total \: cost }{No. \: of \: units }$

Finding the total cost:

$Total \: cost = Average \: fixed \: cost + Average \: variable \: cost$

$Total \: cost = (20 \times 5) + (40 \times 5)$

$Total \: cost = 100 + 200$

$Total \: cost = 300$

Now, adding the values in the average total cost formula

$Average \: cost \: of \: production = \frac{300}{5}$

$Average \: cost \: of \: production = 60$

Therefore, the Average cost of production for 5 units is Rs. 60.

The answer is(d) Rs. 60