Table 21.4 $\begin{array}{|c|r|}
\hline \text { Output (Units per Day) } & \text { Total Cost (Dollars per Day) } \
\hline 0 & 16 \
\hline 1 & 30 \
\hline 2 & 42 \
\hline 3 & 58 \
\hline 4 & 78 \
\hline
\end{array}$
For the output levels in Table 21.4,the minimum of the average variable cost curve occurs at a production rate of
A)3 units per day.
B)2 units per day.
C)4 units per day.
D)Zero units per day.

Question

Table 21.4 $\begin{array}{|c|r|}
\hline \text { Output (Units per Day) } & \text { Total Cost (Dollars per Day) } \
\hline 0 & 16 \
\hline 1 & 30 \
\hline 2 & 42 \
\hline 3 & 58 \
\hline 4 & 78 \
\hline
\end{array}$
 For the output levels in Table 21.4,the minimum of the average variable cost curve occurs at a production rate of
A)3 units per day.
B)2 units per day.
C)4 units per day.
D)Zero units per day.

Quizplus · Accepted Answer

To find the minimum of the average variable cost (AVC), first, calculate the variable cost (VC) for each output level by subtracting the total cost at 0 units (fixed cost) from the total cost at each output level. Then, divide the VC by the output level to get the AVC for each level. The AVC decreases as output increases from 1 to 2 units, indicating the minimum AVC occurs at 2 units per day.

Table 214 For the Output Levels in Table 21