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.At what level of output is this firm at its capacity?
A)10 chairs
B)15 chairs
C)20 chairs
D)25 chairs
E)30 chairs

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.At what level of output is this firm at its capacity?
A)10 chairs 
B)15 chairs 
C)20 chairs 
D)25 chairs 
E)30 chairs

Quizplus · Accepted Answer

Capacity is the level of output at which the firm's average fixed cost (AFC) is minimized. In the given table, we can see that the AFC is minimized at 25 chairs ($6). Therefore, the firm is at its capacity when it produces 25 chairs.

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