The table below provides information on output per month and short-run costs for a firm producing outdoor wooden lounge chairs.All costs are in dollars.
TABLE 7-5
-Refer to Table 7-5.What is the average total cost of producing 30 chairs?
A)$13
B)$14
C)$22
D)$23
E)$33.67

Question

The table below provides information on output per month and short-run costs for a firm producing outdoor wooden lounge chairs.All costs are in dollars.
  TABLE 7-5
-Refer to Table 7-5.What is the average total cost of producing 30 chairs?
A)$13 
B)$14 
C)$22 
D)$23 
E)$33.67

Quizplus · Accepted Answer

To find the average total cost of producing 30 chairs, we need to calculate the total cost and then divide it by the quantity produced. From the table, we can see that the total cost of producing 30 chairs is the sum of the fixed cost and variable cost for the output level of 30. That is: 
Total Cost = Fixed Cost + Variable Cost = 150 + (30 x 1) + (0.2 x 30^2) = 150 + 30 + 180 = 360 
So, the average total cost of producing 30 chairs is: 
Average Total Cost = Total Cost / Quantity = 360 / 30 = 12 
Therefore, the correct answer is option E ($33.67 is an incorrect calculation).

The Table Below Provides Information on Output Per Month and Short-Run