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      Question

      A firm produces 100 units at an average variable cost of

      5 and an average total cost of 12. What is the firm's Total Fixed Cost?
      A 7 Correct Answer Incorrect Answer
      B 700 Correct Answer Incorrect Answer
      C 500 Correct Answer Incorrect Answer
      D 1200 Correct Answer Incorrect Answer

      Solution

      Average Fixed Cost (AFC) = ATC - AVC = 12 - 5 = 7. Total Fixed Cost (TFC) = AFC * Q = 7 * 100 = 700.

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