Tony's Taco Truck has an average variable cost of $1.50 and a marginal cost of $2 when it produces 50 units of output (tacos). We can conclude that the average variable cost of producing 51 tacos is
A)higher than $1.50.
B)lower than $1.50.
C)equal to $1.50.
D)either higher or lower than $1.50 depending on the direction of the marginal cost curve.

Question

​Tony's Taco Truck has an average variable cost of $1.50 and a marginal cost of $2 when it produces 50 units of output (tacos). We can conclude that the average variable cost of producing 51 tacos is
A)​higher than $1.50.
B)​lower than $1.50.
C)​equal to $1.50.
D)​either higher or lower than $1.50 depending on the direction of the marginal cost curve.

Quizplus · Accepted Answer

The average variable cost is calculated by dividing the total variable cost by the quantity produced. Since the marginal cost of producing the 51st taco is $2, the total variable cost of producing the 51 tacos is higher than the total variable cost of producing 50 tacos. Therefore, the average variable cost of producing 51 tacos is higher than $1.50.

​Tony's Taco Truck Has an Average Variable Cost of $1

Tony's Taco Truck Has an Average Variable Cost of $1