If the average variable cost of the fifth hat is $30, then the total variable cost of five hats is
A) $6.
B) $150.
C) $1,800.
D) indeterminate from this information.

Question

Quizplus · Accepted Answer

The average variable cost of the fifth hat being $30 means that the cost to produce one more hat (the fifth one) is $30. However, the question asks for the total variable cost of five hats, not just the fifth. Since the average variable cost typically refers to the cost per unit at a specific level of production, and without additional information about how costs change with production levels, it's reasonable to assume a constant average variable cost. Therefore, if the average variable cost for each hat is $30, the total variable cost for five hats would be 5 hats * $30/hat = $150.

If the Average Variable Cost of the Fifth Hat Is