In the diagram, there are three curves plotted against the output (Q):1. **Marginal Cost (MC) Curve** - This is shown in red. It initially decreases, reaches a minimum, and then increases steeply.2. **Average Total Cost (ATC) Curve** - This is shown in blue and is positioned above the AVC curve. It declines, reaches a minimum, and then rises.3. **Average Variable Cost (AVC) Curve** - This is also shown in blue. It is below the ATC curve and follows a similar pattern: decreasing initially, reaching a minimum, and then rising.The x-axis represents the Output (Q), ranging from 0 to 100, while the y-axis represents the cost in dollars, ranging from $0 to $20.**Question:**In the diagram above, when the firm's Output (Q) is 20, Average Variable Cost (AVC) is:- $17.50- $7.50- $12.50- $10.00

Average variable cost refers to the per-unit total variable cost i.e. AVC = TC/Q

Answered: In the diagram above, when the firm's…

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Economics

In the diagram above, when the firm's Output (Q) is 20, Average Variable Cost (AVC) is: $17.50 $7.50 $12.50 $10.00

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

In the diagram, there are three curves plotted against the output (Q):

1. **Marginal Cost (MC) Curve** - This is shown in red. It initially decreases, reaches a minimum, and then increases steeply.

2. **Average Total Cost (ATC) Curve** - This is shown in blue and is positioned above the AVC curve. It declines, reaches a minimum, and then rises.

3. **Average Variable Cost (AVC) Curve** - This is also shown in blue. It is below the ATC curve and follows a similar pattern: decreasing initially, reaching a minimum, and then rising.

The x-axis represents the Output (Q), ranging from 0 to 100, while the y-axis represents the cost in dollars, ranging from $0 to $20.

**Question:**

In the diagram above, when the firm's Output (Q) is 20, Average Variable Cost (AVC) is:

- $17.50
- $7.50
- $12.50
- $10.00

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