Answer the question on the basis of the following cost data. $\begin{array} { | c | c | c | }
\hline \text { Output } & \text { Average Fixed Cost } & \text { Average Variable Cost } \
\hline 1 & \$ 50.00 & \$ 100.00 \
\hline 2 & 25.00 & 80.00 \
\hline 3 & 16.67 & 66.67 \
\hline 4 & 12.50 & 65.00 \
\hline 5 & 10.00 & 68.00 \
\hline 6 & 8.37 & 73.33 \
\hline 7 & 7.14 & 80.00 \
\hline 8 & 6.25 & 87.50 \
\hline
\end{array}$ The marginal cost curve would intersect the average variable cost curve at about

Question

Answer the question on the basis of the following cost data. $\begin{array} { | c | c | c | } 
\hline \text { Output } & \text { Average Fixed Cost } & \text { Average Variable Cost } \
\hline 1 & \$ 50.00 & \$ 100.00 \
\hline 2 & 25.00 & 80.00 \
\hline 3 & 16.67 & 66.67 \
\hline 4 & 12.50 & 65.00 \
\hline 5 & 10.00 & 68.00 \
\hline 6 & 8.37 & 73.33 \
\hline 7 & 7.14 & 80.00 \
\hline 8 & 6.25 & 87.50 \
\hline
\end{array}$ The marginal cost curve would intersect the average variable cost curve at about

Quizplus · Accepted Answer

The point at which the marginal cost curve intersects the average variable cost curve is the minimum point on the AVC curve. This is because the AVC curve slopes downwards at first, then upwards due to the law of diminishing returns. The MC curve intersects the AVC curve where it is changing from decreasing to increasing. Looking at the table, this occurs between 4 and 5 units of output, so the intersection point would be slightly to the left of 5 units, around 4 units. Thus, the answer is B) 4 units of output.

Answer the Question on the Basis of the Following Cost