if AC = Average Cost of production , TC = Total Cost of production VC...

JAMB 1982

if AC = Average Cost of production ,

TC = Total Cost of production

VC = Variable Cost of production

FC = Fixed Cost of production

Q = Quantity of goods produced

Then,

A. AC = TC; TC = VC + FC
B. AC = \(\frac{(TC)}{Q}\): TC = VC + FC
C. AC = TC; TC = (VC)(FC) Q
D. AC = TC- FC: VC = TC- AC
E. AC = TC ; TC = VC + AC Q

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Correct Answer: Option B

Explanation

Average Cost (AC) is defined as the total cost divided by the quantity produced:

AC = \(\frac{TC}{Q}\)

Total Cost (TC) is the sum of Variable Cost (VC) and Fixed Cost (FC):

TC = VC + FC

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if AC = Average Cost of production , TC = Total Cost of production VC...

Correct Answer: Option B

Explanation

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