Day: July 23, 2019

A firm has total variable costs of £36 000.

Its average fixed cost is £6 and its average total cost is £9.

What is the firm’s total output?

Select ONE answer:

1. 2,400
2. 4,000
3. 6,000
4. 12,000

Show your workings to arrive at your answer, and explain and justify your reasons:……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple choice question is suitable for Economics KS5 classes.

The answer is 4

1. This is the total variable cost divided by average fixed cost plus average total cost.
2. This is the total variable cost divided by the average total cost.
3. This is the total variable cost divided by average fixed cost
4. Correct: average total cost minus average fixed cost gives the average variable cost. In this case, this is £9 – £6 = £3. Total variable cost divided by average variable cost equals output: £36,000/£3 = 12,000.

 

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