Study the table below and answer the question.
| Output | TFC | TVC | TC |
| 0 | 20 | 0 | 20 |
| 1 | 20 | 10 | 30 |
| 2 | 20 | 18 | 38 |
| 3 | 20 | 24 | 44 |
| 4 | 20 | 29 | 49 |
| 5 | 20 | 33 | 53 |
| 6 | 20 | 39 | 59 |
What will be the AFC at zero output?
Answer & explanation
Correct answer: option 4
The correct answer is option 4: Undefined
AFC (Average Fixed Cost) is undefined at zero output because we are dividing a positive fixed cost by zero.
| Output | TFC | TVC | TC | AFC |
AVC |
SAC |
SMC |
| 0 | 20 | 0 | 20 | - | - | - | - |
| 1 | 20 | 10 | 30 | 20 | 10 | 30 | 10 |
| 2 | 20 | 18 | 38 | 10 | 9 | 19 | 8 |
| 3 | 20 | 24 | 44 | 6.67 | 8 | 14.67 | 6 |
| 4 | 20 | 29 | 49 | 5 | 7.25 | 12.25 | 5 |
| 5 | 20 | 33 | 53 | 4 | 6.6 | 10.6 | 4 |
| 6 | 20 | 39 | 59 | 3.33 | 6.5 | 9.83 | 6 |