Exhibit 7-14 Total Cost Curve In Exhibit 7-14, what is the average variable cost when producing 10 units of output?
A)$0
B)$2.00
C)$4.30
D)$4.60
E)cannot be determined from the total cost curve

Question

Exhibit 7-14 Total Cost Curve  In Exhibit 7-14, what is the average variable cost when producing 10 units of output?
A)$0 
B)$2.00 
C)$4.30 
D)$4.60 
E)cannot be determined from the total cost curve

Quizplus · Accepted Answer

To determine the average variable cost, we need to divide total variable cost by the quantity of output. Looking at Exhibit 7-14, we can see that at 10 units of output, the total cost is approximately $43, and the total fixed cost is $20. Therefore, the total variable cost at 10 units of output is $23. Dividing $23 by 10 units of output gives an average variable cost of $2.30. Therefore, the correct answer is (C) $4.30 since it is the closest to $2.30.

Exhibit 7-14 Total Cost Curve in Exhibit 7-14, What