Table 1

Q TC TVC

0 $1,000 $0

100 1,360 360

200 1,560 560

300 1,960 960

400 2,760 1,760

500 4,000 3,000

600 5,800 4,800

Table 1 shows the short-run cost data of a perfectly competitive firm that produces plastic camera cases. Assume that output can only be increased in batches of 100 units.

What is average fixed cost of production for 500 units?

Select one:

a.

$4000

b.

$3000

c.

$2

d.

$0