Answer:
The answer is option (c) $1.71
Explanation:
Solution
Given that:
Doreenas Dairy produced =7000 pounds (Q)
Each pounds was sold for =$6
The incurred variable costs (vc) =$28,000
Total cost (Tc)= $40,000
Now we find the he firm's average fixed cost
Thus,
Fixed cost =Total cost (Tc) - Incurred variable cost (vc)
= $40,000 - $28,0000
=12,000
So, the average fixed costs (AFC) =FC/Q
=12,000/7000
=$1.714
Therefore the average fixed cost of the firm is $1.71