$$\begin{array}{l}
\begin{array} { | l | r | r | r | r | }
\hline \text { Output (units per day) } & 0 & 10 & 20 & 30 \
\hline \text { Total cost (dollars per day) } & \$ 40 & \$ 54 & \$ 62 & \$ 80 \
\hline
\end{array}\
\text { Table } 21.2
\end{array}$$ For the output levels in Table 21.2, the minimum of the average variable cost curve occurs at a production rate of
A) Zero units per day.
B) 10 units per day.
C) 20 units per day.
D) 30 units per day.

Question

$$\begin{array}{l}
\begin{array} { | l | r | r | r | r | } 
\hline \text { Output (units per day) } & 0 & 10 & 20 & 30 \
\hline \text { Total cost (dollars per day) } & \$ 40 & \$ 54 & \$ 62 & \$ 80 \
\hline
\end{array}\
\text { Table } 21.2
\end{array}$$ For the output levels in Table 21.2, the minimum of the average variable cost curve occurs at a production rate of
A) Zero units per day.
B) 10 units per day.
C) 20 units per day.
D) 30 units per day.

Quizplus · Accepted Answer

The minimum point of the average variable cost curve is where the curve intersects with the marginal cost curve. This occurs at a production rate of 20 units per day, which is where the marginal cost is equal to the average variable cost. At production rates below 20 units per day, the average variable cost is increasing and is above the marginal cost, and at production rates above 20 units per day, the average variable cost is also increasing and is above the marginal cost. Therefore, the production rate that minimizes the average variable cost is 20 units per day.

For the Output Levels in Table 21