Asked by CH hannan aslam on Sep 23, 2024
Verified
If a firm produces 10 units,TC=$100.When the firm increase its output to 15 units,TC= $150.The firm's AVC equal to
A) $5
B) $10
C) $50
D) $100
AVC
Stands for Average Variable Cost, which is the per-unit cost of production excluding fixed costs, changing with the level of output.
Output
The total amount of goods or services produced by a person, machine, or industry.
- Examine the impact of output variations on variable and overall costs.
Verified Answer
VL
Vivvi Lewis1 day ago
Final Answer :
B
Explanation :
AVC (Average Variable Cost) is calculated as follows:
AVC = VC/Q
Where VC is the variable cost and Q is the quantity produced.
From the information given, we can calculate the variable cost at both levels of production:
When 10 units are produced, TC = $100
Therefore, AC = $100/10 = $10
Fixed Cost (FC) = $100 - $100 = $0
Variable Cost (VC) = $100
When 15 units are produced, TC = $150
Therefore, AC = $150/15 = $10
Fixed Cost (FC) = $150 - $100 = $50
Variable Cost (VC) = $100
Now, we can calculate the AVC at the second level of production:
AVC = VC/Q
AVC = $100/15
AVC = $6.67
Therefore, the answer is not A or D since they are not equal to the calculated AVC. The answer is B, which equals the calculated AVC.
AVC = VC/Q
Where VC is the variable cost and Q is the quantity produced.
From the information given, we can calculate the variable cost at both levels of production:
When 10 units are produced, TC = $100
Therefore, AC = $100/10 = $10
Fixed Cost (FC) = $100 - $100 = $0
Variable Cost (VC) = $100
When 15 units are produced, TC = $150
Therefore, AC = $150/15 = $10
Fixed Cost (FC) = $150 - $100 = $50
Variable Cost (VC) = $100
Now, we can calculate the AVC at the second level of production:
AVC = VC/Q
AVC = $100/15
AVC = $6.67
Therefore, the answer is not A or D since they are not equal to the calculated AVC. The answer is B, which equals the calculated AVC.
Learning Objectives
- Examine the impact of output variations on variable and overall costs.