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) $\$ 15$

Question

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) $\$ 15$

Accepted Answer

∻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. ⚹◊What is the formula for calculating average variable cost in Microeconomics?⍭ Generate me a similar question◊

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