A firm that produces and sells toys has a factory located in New Town built on a 50,000 square feet plot of land.The following table gives information about the costs of production and output of the firm.
Table 6-1

-Refer to Table 6-1.What is the average variable cost of producing a toy?
A)$0.40
B)$3.80
C)$5.20
D)$4
E)$5

Question

A firm that produces and sells toys has a factory located in New Town built on a 50,000 square feet plot of land.The following table gives information about the costs of production and output of the firm.
Table 6-1
 
-Refer to Table 6-1.What is the average variable cost of producing a toy?
A)$0.40 
B)$3.80 
C)$5.20 
D)$4 
E)$5

Quizplus · Accepted Answer

To find the average variable cost, we need to divide the total variable cost by the output. Looking at the table, the total variable cost for producing 1000 toys is $3800. Therefore, the average variable cost of producing a toy is $3.80 (3800/1000).

A Firm That Produces and Sells Toys Has a Factory