The table below provides information on output per month and short- run costs for a firm producing outdoor wooden lounge chairs. $$\begin{array}{l}
\begin{array} { | l | l | l | }
\hline \text { TFC } & \text { TVC } & \text { TC } \
\hline 200 & 200 & 400 \
\hline 200 & 220 & 420 \
\hline 200 & 240 & 440 \
\hline 200 & 260 & 460 \
\hline 200 & 350 & 550 \
\hline 200 & 810 & 1010 \
\hline
\end{array}\
\text { TABLE 7- } 5
\end{array}$$
-Refer to Table 7- 5. Given the information in the table about short- run costs, this firm would minimize the average variable cost of production when producing
A) 20 chairs.
B) 15 chairs.
C) 30 chairs.
D) 10 chairs.
E) 25 chairs.

Question

The table below provides information on output per month and short- run costs for a firm producing outdoor wooden lounge chairs. $$\begin{array}{l}
\begin{array} { | l | l | l | } 
\hline \text { TFC } & \text { TVC } & \text { TC } \
\hline 200 & 200 & 400 \
\hline 200 & 220 & 420 \
\hline 200 & 240 & 440 \
\hline 200 & 260 & 460 \
\hline 200 & 350 & 550 \
\hline 200 & 810 & 1010 \
\hline
\end{array}\
\text { TABLE 7- } 5
\end{array}$$
-Refer to Table 7- 5. Given the information in the table about short- run costs, this firm would minimize the average variable cost of production when producing
A) 20 chairs.
B) 15 chairs.
C) 30 chairs.
D) 10 chairs.
E) 25 chairs.

Quizplus · Accepted Answer

The average variable cost is minimized when the marginal cost equals the average variable cost. The marginal cost is the change in total variable cost divided by the change in output. The average variable cost is the total variable cost divided by the output. In this case, the marginal cost is 20 and the average variable cost is 10 when the output is 20 chairs. Therefore, the firm would minimize the average variable cost of production when producing 20 chairs.

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