Sport Tee Corporation manufactures T-shirts bearing the logos of professional football teams.The wholesale market for sport T-shirts is perfectly competitive.The manager forecasts the wholesale price of T-shirts next year to be $7.00.The firm's estimated marginal cost is where Q is the number of T-shirts produced and sold each month.Sport Tee Corporation will have a fixed cost of $2,000 per month.Average variable cost at Sport Tee is

Question

Sport Tee Corporation manufactures T-shirts bearing the logos of professional football teams.The wholesale market for sport T-shirts is perfectly competitive.The manager forecasts the wholesale price of T-shirts next year to be $7.00.The firm's estimated marginal cost is  where Q is the number of T-shirts produced and sold each month.Sport Tee Corporation will have a fixed cost of $2,000 per month.Average variable cost at Sport Tee is

Quizplus · Accepted Answer

Average variable cost (AVC) can be calculated using the equation: AVC = 11eab534_696a_91cf_9198_e33a4fdea2e6_TB2562_11/Q
In this case, the equation for marginal cost is given as: MC = 11eab534_696a_91cf_9198_e33a4fdea2e6_TB2562_11
Therefore, we can substitute MC in place of AVC to get: MC = AVC + FC/Q
Solving this equation for AVC, we get: AVC = MC - FC/Q
Substituting the given values, we get:
AVC = 11eab534_696a_91cf_9198_e33a4fdea2e6_TB2562_11/Q - $2000/Q
Simplifying this expression, we get:
AVC = (0.0025Q + 0.000000266Q^2) - ($2000/Q)
Therefore, the correct answer is B, which matches this expression.

Sport Tee Corporation Manufactures T-Shirts Bearing the Logos of Professional