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At 20 units of output, a firm finds that its average variable cost is $5 per unit and its average total cost is $8 per unit
At 20 units of output, a firm finds that its average variable cost is $5 per unit and its average total cost is $8 per unit. Therefore, its
a. marginal cost is less than $3 per unit.
b. marginal cost is $3 per unit.
c. average fixed cost is $3 per unit.
d. marginal cost is equal to its average fixed cost.
Expert Solution
The correct answer to the given question is option c. average fixed cost is $3 per unit.
The average fixed cost per unit is given by:
=Average total cost - average variable cost=$8−$5=$3
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