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GCE Economics 1989 Question 14

Question 14

Theory of Costs and Revenue

Given that fixed cost is N500.00, variable cost is N1,500.00 and output is 50 units, what will be the average cost of producing one unit?

  1. A.N2,000.00
  2. B.N60.00
  3. C.N50.00
  4. D.N40.00
  5. E.N30.00.
Show the answer and explanation

Answer: D (N40.00)

Explanation

Total cost = 500 + 1,500 = N2,000. Average cost = 2,000 ÷ 50 = N40.