A firm currently produces 1000 units of output and has total costs of $\$ 15,000$ and fixed costs of $\$ 3,000$.

What is the firm's average variable costs?
Choose 1 answer:
(A) $\$ 12$
(B) $\$ 0$
(C) $\$ 3$
(D) $\$ 15$
(E) $\$ 19$

Question

A firm currently produces 1000 units of output and has total costs of $\$ 15,000$ and fixed costs of $\$ 3,000$.

What is the firm's average variable costs?
Choose 1 answer:
(A) $\$ 12$
(B) $\$ 0$
(C) $\$ 3$
(D) $\$ 15$
(E) $\$ 19$

Accepted Answer

***A*** ∻Key Concept∻ ⚹Average Variable Cost (AVC)⚹ ∻Explanation∻ ⚹The Average Variable Cost (AVC) is calculated by subtracting the fixed costs from the total costs and then dividing by the quantity of output produced. In this case, AVC = $\frac{Total\ Costs - Fixed\ Costs}{Quantity}$ = $\frac{15000 - 3000}{1000}$ = $12.⚹◊What is the formula for calculating average variable costs in microeconomics?⍭ Generate me a similar question◊

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