WAEC Economics 2010 Theory — Question 4
Question 4 of 23 from the West African Examinations Council (WAEC) Economics 2010 Theory paper, with the correct answer and a full explanation.
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2. [Table: The cost function of a poultry farm. Cost of a crate of eggs is $21. Quantity of eggs (in crates): 0-5; Total cost (in $): 50,55,62,75,96,125; further data given for quantities 6,7,8: Total cost 162,203,248] (a) What is the fixed cost of the farm? (2 marks)
Model answer
The fixed cost is FC = TC - VC. That is, fixed cost is the difference between the total cost and the variable cost. If output is zero, variable cost will be zero, therefore fixed cost and total cost will be equal. At q=0, TC=$50, so FC=$50 when q=0.
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