If the total cost of producing one unit of the output is $100 and the

If the total cost of producing one unit of the output is $100 and the marginal cost of that unit is $20, the average fixed cost of producing two units of output is ________.

Fill in the blank(s) with correct word

ANSWER

$40

Marginal cost = Variable cost ; As we are producing only 1 unit variable cost will be $20
Total Fixed Cost = Total Cost – Total Variable Cost
$100 – $20 = $80
Average Fixed Cost = 80/2 = $40