In the short run, if average variable cost equals R23, average total cost equals R971, and output equals 42, the total fixed cost must be:
To find the total fixed cost, we can use the formula:
Total cost = Total fixed cost + Total variable cost
Given:
Average variable cost (AVC) = R23
Average total cost (ATC) = R971
Output = 42
Total variable cost = AVC * Output
Total variable cost = R23 * 42
Total variable cost = R966
Total cost = Total fixed cost + Total variable cost
R971 = Total fixed cost + R966
Total fixed cost = R971 - R966
Total fixed cost = R5
Therefore, the total fixed cost must be R5.