$$\begin{array}{l}
\begin{array} { | c | c | }
\hline \begin{array} { c }
\text { Output } \
\text { (Units per Day) }
\end{array} & \begin{array} { c }
\text { Total Cost } \
\text { (Dollars per Day) }
\end{array} \
\hline 0 & 16 \
\hline 1 & 30 \
\hline 2 & 42 \
\hline 3 & 58 \
\hline 4 & 78 \
\hline
\end{array}\
\text { Table 21.4 }
\end{array}$$ For the output levels in Table 21.4, the minimum of the average variable cost curve occurs at a production rate of
A) 3 units per day.
B) 2 units per day.
C) 4 units per day.
D) Zero units per day.

Question

$$\begin{array}{l}
\begin{array} { | c | c | } 
\hline \begin{array} { c } 
\text { Output } \
\text { (Units per Day) }
\end{array} & \begin{array} { c } 
\text { Total Cost } \
\text { (Dollars per Day) }
\end{array} \
\hline 0 & 16 \
\hline 1 & 30 \
\hline 2 & 42 \
\hline 3 & 58 \
\hline 4 & 78 \
\hline
\end{array}\
\text { Table 21.4 }
\end{array}$$ For the output levels in Table 21.4, the minimum of the average variable cost curve occurs at a production rate of
A) 3 units per day.
B) 2 units per day.
C) 4 units per day.
D) Zero units per day.

Quizplus · Accepted Answer

To find the minimum of the average variable cost (AVC), we first calculate the variable cost (VC) for each output level by subtracting the total cost at zero output (fixed cost) from the total cost at each output level. Then, we divide the VC by the output level to get AVC. The AVC decreases initially and then starts to increase, indicating the minimum point. For 1 unit, VC = 30 - 16 = 14, AVC = 14/1 = 14. For 2 units, VC = 42 - 16 = 26, AVC = 26/2 = 13. For 3 units, VC = 58 - 16 = 42, AVC = 42/3 = 14. The AVC is lowest at 2 units per day, indicating the minimum of the AVC curve occurs there.

For the Output Levels in Table 21