The Sunshine Corporation finds that its costs are $40 when it produces no output. Its total variable costs (TVC) change with output as shown in the accompanying table. Use this information to answer the following question. $\begin{array}{|c|c|}
\hline \text { Output } & \text { TVC } \
\hline 1 & \$ 30 \
\hline 2 & 50 \
\hline 3 & 65 \
\hline 4 & 85 \
\hline 5 & 110 \
\hline
\end{array}$ The average total cost of 3 units of output is

Question

Quizplus · Accepted Answer

To find the average total cost of 3 units of output, we need to calculate the total cost (TC) and then divide it by 3.

From the information given in the question, we know that when the company produces no output, its costs are $40. This means that $40 is the fixed cost (FC).

To calculate the TVC at 3 units of output, we look at the table and find that TVC for 3 units is $65.

Therefore, TC = FC + TVC = $40 + $65 = $105

Average total cost = TC/output = $105/3 = $35.

Therefore, the best choice is D, with an average total cost of $35 when 3 units of output are produced.

The Sunshine Corporation Finds That Its Costs Are $40 When