Question

Microeconomics

Posted 6 months ago

```
pre Cracuius proauces and sells pies. Its total cost of producing different quantities of pie are given in the table below.
\begin{tabular}{ll}
Quantity of pies & Total cost \\
\hline 0 & $\$ 400$ \\
1 & $\$ 420$ \\
2 & $\$ 435$ \\
3 & $\$ 455$ \\
4 & $\$ 480$ \\
5 & $\$ 510$ \\
6 & $\$ 545$
\end{tabular}
What is the average variable cost of the fourth pie?
Choose 1 answer:
(A) $\$ 120$
(B) $\$ 20$
(C) $\$ 30$
(D) $\$ 25$
(E) $\$ 15$
```

Sign in to unlock the answer

Answer from Sia

Posted 6 months ago

Solution

a

Definition of Average Variable Cost (AVC): The average variable cost is calculated by dividing the total variable cost (TVC) by the quantity of output produced

b

Calculation of Total Variable Cost (TVC): The total variable cost can be found by subtracting the total fixed cost (TFC) from the total cost (TC). Given that the total cost of producing 0 pies is $400, this is the total fixed cost

c

Calculation of TVC for 4 pies: TVC for 4 pies = TC for 4 pies - TFC = $480 -$400 = $80

d

Calculation of AVC for 4 pies: AVC = \frac{TVC}{Q} = \frac{80}{4} = $20

Answer

(B) $20

Key Concept

Average Variable Cost (AVC)

Explanation

The average variable cost is calculated by dividing the total variable cost by the quantity of output produced. In this case, the total variable cost for producing 4 pies is $80, and the quantity is 4, resulting in an average variable cost of$20 per pie.

Not the question you are looking for? Ask here!

Enter question by text

Enter question by image

Unlock Smarter Learning with AskSia Super!

Join Super, our all-in-one AI solution that can greatly improve your learning efficiency.

30% higher accuracy than GPT-4o

Entire learning journey support

The most student-friendly features

Study Other Question