Refer to the table to the right which shows cost data for Lotus Lanterns, a producer of whimsical night lights. What is the average variable cost per unit of production when the firm produces 90 lanterns? Part 2 A. $490 B. $5.45 C. $33.67
Refer to the table to the right which shows cost data for Lotus Lanterns, a producer of whimsical night lights. What is the average variable cost per unit of production when the firm produces 90 lanterns? Part 2 A. $490 B. $5.45 C. $33.67
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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fast please10.
Refer to the table to the right which shows cost data for Lotus Lanterns, a producer of whimsical night lights.
What is the average variable cost per unit of production when the firm produces 90 lanterns?
Part 2
$490
$5.45
$33.67
$7.67
Transcribed Image Text:The table provides an overview of cost dynamics associated with producing varying quantities of lanterns. It includes details on fixed costs, variable costs, total costs, and average total costs. Here's a breakdown of the information presented:
| Quantity of Lanterns | Fixed Cost (Dollars) | Variable Cost (Dollars) | Total Cost (Dollars) | Average Total Cost (Dollars) |
|----------------------|----------------------|-------------------------|----------------------|-----------------------------|
| 75 | 200 | 170 | 370 | 4.93 |
| 80 | 200 | 230 | 430 | 5.36 |
| 90 | 200 | 500 | 700 | 7.67 |
| 100 | 200 | 810 | 1010 | 11.8 |
| 115 | 200 | 1064 | 1264 | 11.8 |
| 117 | 200 | 1264 | 1464 | 12.5 |
| 120 | 200 | 1480 | 1680 | 14.0 |
- **Fixed Cost (Dollars):** This cost remains constant at $200 regardless of the quantity of lanterns produced.
- **Variable Cost (Dollars):** This cost increases with the quantity produced, indicating the cost incurred from producing additional units.
- **Total Cost (Dollars):** Calculated as the sum of fixed and variable costs for each quantity level.
- **Average Total Cost (Dollars):** Obtained by dividing the total cost by the quantity of lanterns produced, reflecting the cost per unit at each production level.
This table helps in analyzing how costs evolve with varying production scales, which is essential for informed decision-making in production and pricing strategies.
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