This graph reflects the following data that demonstrates that fixed costs per unit are very high at low production levels and drop dramatically to a relatively low cost at high production levels. To determine the average fixed cost per unit produced you divide the total fixed cost by the quantity of product produced.

This graph reflects the following data that demonstrates that as workers are added to a production, facility production per worker increases to an optimum number of workers, in this case six.Once the optimum level is reached, adding additional workers leads to a decline in average output per worker as each worker adds fewer and fewer additional products.This phenomenon is called the law of diminishing returns. For example, if additional units of one productive input are combined with a fixed quantity of another productive input, the average output per unit will increase at first and then decline.

Output Quantity Fixed Costs Variable Costs Total Costs Average Costs |Marginal Cost Average/ Total Revenue Profit/Loss Marginal Revenue 0 $150 0 5 $150 $15 $8.00 10 $150 $25 $8.00 15 $150 $30 $8.00 20 $150 $40 $8.00 25 $150 $50 $8.00 30 $150 $65 $8.00 35 $150 $95 $8.00 40 $150 $145 $8.00 45 $150 $200 $8.00