Suppose Ben owns a small company that makes kites. The market for kites is perfectly competitive, and kites sell for $25 each. Ben's total production costs vary depending on the number of kites he makes each day, as shown in the accompanying table.
$$\begin{array} { | c | c | }
\hline \text { Number d kites Per Day } & \text { Tutal Cast Per Day (\$) } \
\hline 0 & 100 \
\hline 1 & 110 \
\hline 2 & 126 \
\hline 3 & 148 \
\hline 4 & 172 \
\hline 5 & 200 \
\hline 6 & 235 \
\hline
\end{array}$$
When Ben makes 2 kites per day, what is his average variable cost?

Question

Suppose Ben owns a small company that makes kites. The market for kites is perfectly competitive, and kites sell for $25 each. Ben's total production costs vary depending on the number of kites he makes each day, as shown in the accompanying table.  
$$\begin{array} { | c | c | } 
\hline \text { Number d kites Per Day } & \text { Tutal Cast Per Day (\$) } \
\hline 0 & 100 \
\hline 1 & 110 \
\hline 2 & 126 \
\hline 3 & 148 \
\hline 4 & 172 \
\hline 5 & 200 \
\hline 6 & 235 \
\hline
\end{array}$$  
When Ben makes 2 kites per day, what is his average variable cost?

Quizplus · Accepted Answer

The average variable cost (AVC) is calculated by subtracting the fixed cost from the total cost and then dividing by the quantity produced. Fixed cost is $100 (the cost when no kites are produced). For 2 kites, total cost is $126, so variable cost is $126 - $100 = $26. AVC = $26 / 2 = $13.

Suppose Ben Owns a Small Company That Makes Kites When Ben Makes 2 Kites Per Day, What Is His