A pizza business has the cost structure described below. The firm's fixed cost is $20 per day.
Question:
Output (pizzas per day) Total cost of output (fixed + variable)
0...................................................................................$20
5...................................................................................$80
10................................................................................$120
15................................................................................$150
20................................................................................$175
25................................................................................$195
30................................................................................$210
35................................................................................$230
40................................................................................$225
What are the firm's average fixed costs (AFC) at an output of 5 pizzas?
a. $4
b. $20
c. $80
d. $100
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