At 20 units of output, a firm finds that its average variable cost is $5 per unit and its average total cost is $8 per unit.Therefore, its:
A) marginal cost is less than $3 per unit.
B) marginal cost is $3 per unit.
C) average fixed cost is $3 per unit.
D) marginal cost is equal to its average fixed cost.

Question

Quizplus · Accepted Answer

At 20 units of output, the average total cost (ATC) is $8 per unit and the average variable cost (AVC) is $5 per unit. The difference between ATC and AVC gives the average fixed cost (AFC), which is $3 per unit. Marginal cost (MC) information is not provided directly, so we cannot accurately determine its relationship to AFC or its exact value based on the given information.

At 20 Units of Output, a Firm Finds That Its