The table below presents cost data for a firm at different levels of output. It includes Total Fixed Cost, Total Variable Cost, Total Cost, Marginal Cost, Average Variable Cost, Average Fixed Cost, and Average Total Cost.| Output (Q) | Total Fixed Cost | Total Variable Cost | Total Cost | Marginal Cost | Average Variable Cost | Average Fixed Cost | Average Total Cost ||------------|------------------|---------------------|------------|---------------|-----------------------|--------------------|-------------------|| 0 | $200 | $0 | $200 | --- | --- | --- | --- || 20 | $200 | $150 | $350 | --- | --- | --- | --- || 40 | $200 | $250 | $450 | --- | --- | --- | --- || 60 | $200 | $450 | $650 | --- | --- | --- | --- || 80 | $200 | $800 | $1,000 | --- | --- | --- | --- |**Question:**For the cost data shown above, what is this firm's Average Variable Cost (AVC) when Output (Q) is 60?**Options:**- $7.50- $6.25- $5.00- $450

Answered: Total Total Average Average Average…

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

The table below presents cost data for a firm at different levels of output. It includes Total Fixed Cost, Total Variable Cost, Total Cost, Marginal Cost, Average Variable Cost, Average Fixed Cost, and Average Total Cost.

| Output (Q) | Total Fixed Cost | Total Variable Cost | Total Cost | Marginal Cost | Average Variable Cost | Average Fixed Cost | Average Total Cost |
|------------|------------------|---------------------|------------|---------------|-----------------------|--------------------|-------------------|
| 0 | $200 | $0 | $200 | --- | --- | --- | --- |
| 20 | $200 | $150 | $350 | --- | --- | --- | --- |
| 40 | $200 | $250 | $450 | --- | --- | --- | --- |
| 60 | $200 | $450 | $650 | --- | --- | --- | --- |
| 80 | $200 | $800 | $1,000 | --- | --- | --- | --- |

**Question:**
For the cost data shown above, what is this firm's Average Variable Cost (AVC) when Output (Q) is 60?

**Options:**
- $7.50
- $6.25
- $5.00
- $450

Expert Solution

Step 1

The total cost incurred by a firm operating in a market includes fixed costs and variable costs. Fixed costs are the costs that do not change when there is a change in the quantity of output. variable costs changes with changes in the quantity of output.

Marginal cost is the cost of producing one more unit of the output. The average cost is the cost of producing one unit of the output.

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