ExpertMedium2 marksStructured
AQA GCSE · Question 14.1 · How markets work
Using Table 2, calculate the average fixed cost of making 15 surfboards.
Table 2
Number of surfboards produced and sold Total revenue (£) Total cost (£) 0 0 1500 5 1000 2000 10 2000 2500 15 3000 3000 20 4000 3500
Using Table 2, calculate the average fixed cost of making 15 surfboards.
Table 2
| Number of surfboards produced and sold | Total revenue (£) | Total cost (£) |
|---|---|---|
| 0 | 0 | 1500 |
| 5 | 1000 | 2000 |
| 10 | 2000 | 2500 |
| 15 | 3000 | 3000 |
| 20 | 4000 | 3500 |
How to approach this question
1. Identify the total fixed cost (TFC) from the table. Fixed costs are the costs incurred even when output is zero. From the table, at 0 surfboards, the total cost is £1500, so TFC = £1500. 2. Identify the quantity (Q), which is 15 surfboards. 3. Use the formula for Average Fixed Cost (AFC): AFC = TFC / Q. 4. Calculate: £1500 / 15 = £100.
Full Answer
The fixed cost is the cost at zero output, which is £1500.
Average Fixed Cost (AFC) = Total Fixed Cost / Quantity
AFC = £1500 / 15 = £100.
Fixed costs are expenses that do not change with the level of output. In the table, when 0 surfboards are produced, the total cost is £1500. This represents the firm's total fixed cost (TFC). Average Fixed Cost (AFC) is the fixed cost per unit of output. To calculate it, we divide the total fixed cost by the number of units produced. For 15 surfboards, the calculation is AFC = £1500 / 15 = £100.
Common mistakes
Using the total cost at 15 units (£3000) instead of the fixed cost, or making a calculation error.
Practice the full AQA GCSE Economics Paper 1
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