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JAMB Economics 2003 Question 12

Question 12

Theory of Costs and Revenue

Use the table below to answer the question.
Output produced per day (Units) | Fixed cost per day (₦) | Total cost per day (₦)
20 | 60 | 100
30 | 60 | 120
40 | 60 | 130
50 | 60 | 135
60 | 60 | 150
70 | 60 | 170
80 | 60 | 190
At 60 units of output, the AVC is

  1. A.₦2.50
  2. B.₦1.50
  3. C.₦90.00
  4. D.₦150.00
Show the answer and explanation

Answer: B (₦1.50)

Explanation

Variable cost = total cost − fixed cost = ₦150 − ₦60 = ₦90. AVC = ₦90 ÷ 60 = ₦1.50.