Refer to the following:
The following graph shows the marginal and average product curves for labor, the firm's only variable input. The monthly wage for labor is $2,800. Fixed cost is $160,000.

-what output does the firm reach minimum average variable cost?
A) 7,400
B) 8,000 units
C) 100 units
D) 6,000
E) 600

Question

Refer to the following:
The following graph shows the marginal and average product curves for labor, the firm's only variable input. The monthly wage for labor is $2,800. Fixed cost is $160,000.
 
-what output does the firm reach minimum average variable cost?
A) 7,400 
B) 8,000 units 
C) 100 units 
D) 6,000 
E) 600

Quizplus · Accepted Answer

The firm reaches minimum average variable cost at 8,000 units, as this is typically where the firm operates most efficiently before increasing marginal costs start to outweigh the benefits of increased production.

Refer to the Following