CFA Practice Question

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CFA Practice Question

A firm is producing 100 units of output at a total cost of $400. The firm's average variable cost is $3 per unit. What is the firm's total fixed cost?

A. $1
B. $100
C. $300
Correct Answer: B

Total variable cost equals average variable cost multiplied by output, $300 in this case. Since total fixed cost is the difference between total cost and total variable cost, it must equal $100.

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