If the total cost is E1000 and the average fixed cost is E15 with 20 units of output, then the average variable cost at that level of output is c. E35.
The variable cost is the cost element that varies with output.
When the output increases, the variable cost increases in total, while remaining the same per unit.
Total cost = E1,000
Average fixed cost = E15
Output = 20 units
Total fixed cost = E300 (E15 x 20)
Total variable cost = E700 (E1,000 - E300)
Average variable cost = E35 (E700/20)
Thus, if the total cost is E1000 and the average fixed cost is E15 when 20 units of output are produced, then the average variable cost at that level of output is c. E35.
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