Question

Karen runs a print shop that makes posters for large companies. It is a very competitive business. The market price is currently $1 per poster. She has fixed costs of $100. Her variable costs are $1,500 for the first thousand posters, $1,200 for the second thousand, and then $800 for each additional thousand posters. What is her AFC per poster (not per thousand!) if she prints: a)1,000 posters b)2,000 posters c)10,000 posters

Answer 1

a)- AFC per 1000 Posters:

= 100/1000

= 0.1 $

b)- AFC per 2000 Posters

= 0.05$

c)- AFC per 10,000 posters

= 0.01$