-The above table gives some cost data for Peter's Pickles. Peter's fixed cost is $20. Average variable cost (AVC) is lowest when output is equal to
A) 1 barrel of pickles.
B) 2 barrels of pickles.
C) 3 barrels of pickles.
D) 4 barrels of pickles.

Question

-The above table gives some cost data for Peter's Pickles. Peter's fixed cost is $20. Average variable cost (AVC) is lowest when output is equal to
A) 1 barrel of pickles. 
B) 2 barrels of pickles. 
C) 3 barrels of pickles. 
D) 4 barrels of pickles.

Quizplus · Accepted Answer

Average variable cost (AVC) is lowest when the cost per unit of output is minimized. Typically, AVC decreases with increased production up to a certain point due to economies of scale, and then starts to increase. The table indicates that AVC is lowest at 3 barrels of pickles.

-The Above Table Gives Some Cost Data for Peter's Pickles