Table 13-3

Table 13-3 shows the demand and cost schedules for a monopolistically competitive firm.
-Refer to Table 13-3.What is its average variable cost of production at its optimal output level?
A)$0 (because its optimal output = 0)
B)$15
C)$14.75
D)$29

Question

Table 13-3
  
Table 13-3 shows the demand and cost schedules for a monopolistically competitive firm.
-Refer to Table 13-3.What is its average variable cost of production at its optimal output level?
A)$0 (because its optimal output = 0) 
B)$15 
C)$14.75 
D)$29

Quizplus · Accepted Answer

To find the optimal output level, we need to look for the quantity where marginal revenue (MR) equals marginal cost (MC). In this case, the optimal output level is 4 units. At this level, the average variable cost (AVC) is $14.75. This can be calculated by adding the total variable cost (TVC) of producing 4 units ($59) and dividing by the quantity produced (4). Therefore, the answer is (C) $14.75. Option A is incorrect because the optimal output level is not zero. Option B is incorrect because $15 is not the AVC at any quantity. Option D is incorrect because $29 is the total cost (TC) at the optimal output level, not the AVC.

Table 13-3 Table 13-3 Shows the Demand and Cost Schedules for a and Cost