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.
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:
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