Use the following to answer question:
-(Table: Output and Marginal Cost)Use Table: Output and Marginal Cost.After graduation,you achieve your dream of opening an art shop that specializes in selling mud statues.How many statues should you produce to minimize your average variable costs?
A)two
B)three
C)four
D)five

Question

Use the following to answer question: 
-(Table: Output and Marginal Cost)Use Table: Output and Marginal Cost.After graduation,you achieve your dream of opening an art shop that specializes in selling mud statues.How many statues should you produce to minimize your average variable costs?
A)two 
B)three 
C)four 
D)five

Quizplus · Accepted Answer

To minimize average variable costs, we need to produce at the point where marginal cost equals average variable cost. Looking at the table, we can see that the marginal cost is lowest at the fourth unit of output. At this point, the average variable cost is $8, which is also the lowest. Therefore, the best choice is to produce four statues.

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