If the total cost of producing 20 units of output is $1,000 and the average variable cost is $35, what is the firm's average fixed cost at that level of output? 0, $50, $65 , or $15

To figure out the average fixed cost (AFC), we first need to understand the relationship between total cost (TC), variable cost (TVC), and fixed cost (TFC). We know that: \[ TC = TVC + TFC \] Given that the total cost of producing 20 units is \$1,000, and the average variable cost (AVC) is \$35, we can first calculate the total variable cost: \[ TVC = AVC \times Q = 35 \times 20 = \$700 \] Now that we have TVC, we can find TFC using: \[ TFC = TC - TVC = 1000 - 700 = \$300 \] With the total fixed cost determined, we can now find the average fixed cost: \[ AFC = \frac{TFC}{Q} = \frac{300}{20} = \$15 \] Therefore, the firm's average fixed cost at that level of output is **\$15**.