The manager of Greene Enterprises,Inc.,recently estimated its average variable cost AVC)function to be Greene Enterprises faces total fixed costs TFC)of $300,000.At Greene Enterprises,average variable cost AVC)reaches its minimum value at $________.
A)$28.00
B)$31.67
C)$39.64
D)$43.33
E)$82.00

Question

The manager of Greene Enterprises,Inc.,recently estimated its average variable cost AVC)function to be  Greene Enterprises faces total fixed costs TFC)of $300,000.At Greene Enterprises,average variable cost AVC)reaches its minimum value at $________.
A)$28.00 
B)$31.67 
C)$39.64 
D)$43.33 
E)$82.00

Quizplus · Accepted Answer

To find the minimum AVC, we need to take the derivative of AVC with respect to quantity (Q) and set it to 0.
AVC = 11 + 300,000/Q
dAVC/dQ = -300,000/Q^2
Setting dAVC/dQ = 0, we get Q = sqrt(300,000) = 547.72 (rounded to two decimal places)
Substituting Q back into the AVC function, we get AVC = 11 + 300,000/547.72 = $31.67 (rounded to two decimal places).
Therefore, the answer is B) $31.67.

The Manager of Greene Enterprises,Inc