What is the correct formula to calculate average fixed costs?

Multiple choice question for Profit Maximizing Under Perfect Competition And Monopoly. Select an option, then review the explanation below.

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Change in quantity divided by change in total fixed costTotal fixed cost minus quantityTotal fixed cost divided by quantityQuantity divided by total fixed costNone of the above

Explanation

Average fixed cost is calculated by dividing the total fixed cost (TFC) by the quantity of output produced (q). This gives the fixed cost per unit of output.

Practice related questions from the same subject.

1.In markets that are contestable, how do dominant oligopoly firms typically behave?
2.According to the kinked demand curve model in oligopoly markets, how does the elasticity of demand behave when prices change?
3.Under which scenario is a cartel most likely to be successful?
4.What term describes an agreement between parties to set prices and output levels collectively?
5.What do we call an industry where only a few companies hold the majority of market power?

What is the correct formula to calculate average fixed costs?

Explanation

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