A firm is producing 20 units At this level of output ,the ATC and AVC are respectively equal to - Economics - Production and Costs

Question

A firm is producing 20 units At this level of output ,the ATC
and AVC are respectively equal to Rs 40 and Rs 37 Find out the
total fixed cost of the firm

Richa Gupta · Accepted Answer

Dear Student, the total fixed cost of a firm will be calculated in
the following manner:
We know, Total Fixed Cost is equal to Average Fixed Cost multiplied
by the units of output produced
or, TFC = AFC x Units of Output
Also, ATC = AFC + AVC
So, in order to find Average Fixed Cost,
AFC = ATC - AVC = 40 - 37 = 3
Thus, TFC = 3 x 20 = 60
The total fixed cost of the firm is 60

A firm is producing 20 units. At this level of output ,the ATC and AVC are respectively equal to Rs.40 and Rs.37. Find out the total fixed cost of the firm.