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WAEC Economics 2020 Question 20

Question 20

Theory of Costs and Revenue

If the average fixed cost (AFC) of producing 5 bags of rice is $20.00, the average fixed cost of producing 10 bags will be

  1. A.$2.00
  2. B.$4.00
  3. C.$10.00
  4. D.$20.00.
Show the answer and explanation

Answer: C ($10.00)

Explanation

Fixed cost = 5 × 20 = $100; AFC for 10 bags = 100 ÷ 10 = $10.