Table 9-3
Table 9-3 shows the demand and cost schedules for a monopolistically competitive firm.
-Refer to Table 9-3.What is its average variable cost of production at its optimal output level?

Question

Table 9-3
  Table 9-3 shows the demand and cost schedules for a monopolistically competitive firm.
-Refer to Table 9-3.What is its average variable cost of production at its optimal output level?

Quizplus · Accepted Answer

To find the optimal output level, we look for the quantity at which marginal revenue (MR) equals marginal cost (MC). In this case, we can see that the optimal output level occurs at a quantity of 25, where MR = MC = $23. At this quantity, the average variable cost (AVC) is $14.75. We can see this by looking at the AVC column in the table, where AVC is lowest at a quantity of 25. Therefore, the answer is C.

Table 9-3 Table 9-3 Shows the Demand and Cost Schedules