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Cost Curves · Question 54 of 62

In the graph, what is the AFC at 7 units of output?

Question 54

MediumOriginal question

In the graph, what is the AFC at 7 units of output?

Short-run cost curves from the schedule. MC is 30, 20, 16, 14, 20, 32, 50 for the 1st to 7th unit, lowest at 14 for the 4th. AVC is 30, 25, 22, 20, 20, 22, 26, lowest at 20 for 4 and 5 units. AC (from 2 units) is 55, 42, 35, 32, 32, 34.57, lowest at 32 for 5 and 6 units. AFC falls from 30 at 2 units to 8.57 at 7. MC meets AVC at P (5 units, ₹20) and AC at Q (6 units, ₹32).
Options for question 54

Show the answer and explanation
CorrectNot quiteAnswer A

Correct answer: A

Explanation

  1. AFC = TFC ÷ q = 60 ÷ 7 ≈ ₹8.57.

  2. Check: AC − AVC = 34.57 − 26 = 8.57.

Concept
AFC from the graph
Typical time
70 s
Your time
—
The rule this testsThe shapes of the cost curves
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