A firm has a total variable cost of ₹ 1,000 at 5 units of output, and its fixed costs are ₹ 400. What is the average total cost at 5 units?

1. TC = TFC + TVC = 400 + 1000 = ₹ 1,400. 2. ATC = TC / Q = 1400 / 5 = ₹ 280. 3. Check via parts: AFC = 400/5 = ₹ 80, AVC = 1000/5 = ₹ 200, so ATC = 80 + 200 = ₹ 280. 4. ₹ 200 (B) is only AVC, ₹ 80 (C) is only AFC, and ₹ 1,400 (D) is total cost not average. Hence ₹ 280. _Source: ICAI BoS CA Foundation Paper 4 Business Economics, Ch 3 Unit II "Theory of Cost", p.21_