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A firm produces 10 units with total fixed cost ₹ 1,000 and total variable cost ₹ 670. Its average total cost (ATC = TC/Q) is:
A₹ 67.00
B₹ 100.00
C₹ 167.00
D₹ 174.44
Answer & Solution
Correct answer: C. ₹ 167.00
1. TC = TFC + TVC = 1000 + 670 = ₹ 1,670.
2. ATC = TC / Q = 1670 / 10 = ₹ 167.00.
3. Equivalently ATC = AFC + AVC = 100 + 67 = ₹ 167.00, confirming the result.
4. ₹ 67 is only AVC (B is AFC), and ₹ 174.44 is ATC at 9 units, so they are not the ATC at 10 units. Hence ₹ 167.00.
_Source: ICAI BoS CA Foundation Paper 4 Business Economics, Ch 3 Unit II "Theory of Cost", p.6–7_
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