If a firm produces 10 units,TC=$100.When the firm increase its output to 15 units,TC= $150.The firm's AVC equal to
A)$5
B)$10
C)$50
D)$100

Question

​If a firm produces 10 units,TC=$100.When the firm increase its output to 15 units,TC= $150.The firm's AVC equal to
A)​$5
B)$10
C)$50
D)​$100

Quizplus · Accepted Answer

AVC (Average Variable Cost) is calculated as follows:

AVC = VC/Q

Where VC is the variable cost and Q is the quantity produced.

From the information given, we can calculate the variable cost at both levels of production:

When 10 units are produced, TC = $100
Therefore, AC = $100/10 = $10
Fixed Cost (FC) = $100 - $100 = $0
Variable Cost (VC) = $100

When 15 units are produced, TC = $150
Therefore, AC = $150/15 = $10
Fixed Cost (FC) = $150 - $100 = $50
Variable Cost (VC) = $100

Now, we can calculate the AVC at the second level of production:

AVC = VC/Q
AVC = $100/15
AVC = $6.67

Therefore, the answer is not A or D since they are not equal to the calculated AVC. The answer is B, which equals the calculated AVC.

​If a Firm Produces 10 Units,TC=$100