For a cost function C = 100 + 10Q + Q²,the average variable cost of producing 20 units of output is: A) 10. B) 20. C) 30. D) None of the answers are correct.

Question

Quizplus · Accepted Answer

To find the average variable cost (AVC), we need to first calculate the total variable cost (TVC) by subtracting the fixed cost (FC) from the total cost (TC): TVC = TC - FC = 100 + 10Q + Q² - 100 = 10Q + Q² Then, we can divide the TVC by the quantity of output (Q) to obtain the AVC: AVC = TVC / Q = (10Q + Q²) / Q = 10 + ² / Q Plugging in Q = 20, we get: AVC = 10 + ² / 20 Since we don't have any information about the values of ², we cannot calculate the exact numerical value of AVC. However, we can see that AVC increases as Q decreases (since the second term in the equation becomes larger), which is consistent with the typical U-shaped AVC curve. Therefore, the best choice is C, since it is the only option that represents an AVC that is consistent with standard economic theory.

For a Cost Function C = 100 + 10Q