The following graph shows the marginal and average product curves for labor,the firm's only variable input.The monthly wage for labor is $2,800.Fixed cost is $160,000. At what output does the firm reach minimum average variable cost?
A)7,400
B)8,000
C)100
D)6,000
E)600

Question

The following graph shows the marginal and average product curves for labor,the firm's only variable input.The monthly wage for labor is $2,800.Fixed cost is $160,000.  At what output does the firm reach minimum average variable cost?
A)7,400 
B)8,000 
C)100 
D)6,000 
E)600

Quizplus · Accepted Answer

The point where the average variable cost curve reaches its minimum is where it intersects with the marginal cost curve. In the graph, this occurs at an output level of approximately 8,000 units. Therefore, the answer is B.

The Following Graph Shows the Marginal and Average Product Curves