Table 10.3 Table 10.3 shows the demand and cost schedules for a monopolistically competitive firm.
-Refer to Table 10.3.The average variable cost of production at its optimal output level is
A)$0 (because its optimal output = 0)
B)$15
C)$14.75
D)$29

Question

Table 10.3  Table 10.3 shows the demand and cost schedules for a monopolistically competitive firm.
-Refer to Table 10.3.The average variable cost of production at its optimal output level is
A)$0 (because its optimal output = 0) 
B)$15 
C)$14.75 
D)$29

Quizplus · Accepted Answer

To find the optimal output level, we need to look for the quantity where Marginal Revenue (MR) equals Marginal Cost (MC). In this case, that quantity is 10. At that output level, the Average Total Cost (ATC) is $15, and the Average Variable Cost (AVC) is $14.75 (which is just Variable Costs/Output = $147.50/10). Since the question is asking for the AVC, the answer is C: $14.75.

Table 103 Table 10