Average variable cost is $2.50, if fixed costs are $200, As a firm produces 400 units of output at a total cost of $1,200. Hence, option C is correct.
What is the variable cost?
A production expense known as a variable cost can go up or down in response to shifts in a company's manufacturing activities. For instance, the raw materials required to make a product's components are regarded as variable costs because they frequently change depending on the volume of units produced.
An expense that fluctuates in relation to production output or sales is referred to as a variable cost.
Thus, option C is correct.
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