In the short run, if average variable cost equals R235, average total cost equals R506, and output equals 47, the total fixed cost must be: R____.
The average total cost can be calculated as the sum of average variable cost and average fixed cost. Therefore, we can subtract the average variable cost from the average total cost to find the average fixed cost.
Average fixed cost = Average total cost - Average variable cost
Average fixed cost = R506 - R235
Average fixed cost = R271
Therefore, the total fixed cost must be R271 multiplied by the output:
Total fixed cost = Average fixed cost x Output
Total fixed cost = R271 x 47
Total fixed cost = R12,757
Therefore, the total fixed cost must be R12,757.