O Levels Economics (2281)•2281/12/O/N/20

Explanation
Average Fixed Cost Calculation Steps:
- Identify total fixed costs (TFC) from the problem data, e.g., $50,000.
- Note the output quantity as 10,000 units.
- Apply the formula: Average Fixed Cost (AFC) = TFC / Quantity.
- Compute: 5.
Why A is correct:
- AFC equals total fixed costs divided by units produced, yielding $5 per unit.
Why the others are wrong:
- B confuses AFC with a different cost metric, like average variable cost.
- C likely misapplies total costs instead of fixed costs only.
- D uses incorrect total fixed costs or wrong quantity in the formula.
Final answer: A
Topic: Firms' costs, revenue and objectives
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