Image: Â© Briangotts. Satellite view is showing Valletta, the capital city of Malta. Valletta is located in the central-eastern portion of the island of Malta at the Mediterranean coast.The city is colloquially known as Il-Belt (The City) in Maltese and is the island's principal cultural center.mage: Â© Briangotts. Satellite view is showing Valletta, the capital city of Malta. Valletta is located in the central-eastern portion of the island of Malta at the Mediterranean coast.
Subtract the average variable cost from the average total cost. The answer will be the average fixed cost. In the example, the average variable cost of $1.50 per unit would be subtracted from the average total cost of $3.50 per unit in order to reach an average fixed cost amount of $2 per unit. Note that this matches the average fixed cost calculated in method 1.
Fixed costs are those that do not change as the level of output changes. Variable costs are those costs that change as output changes. Fixed costs can be quite large. In the airline industry, for example, fixed costs range from 40 to 70 percent of total costs.n our widget example, we will assume that the fixed cost for the stapler, pen, and âfactoryâ is $10 and the cost of each worker hired is $5 per worker. Since fixed costs are constant, the firm incurs $10 regardless of the level of output. Labor is the only variable cost computed by $5 times the number of workers.