Average variable cost is at a minimum at the same amount of output at which the A

Economics Dec 07, 2020

Average variable cost is at a minimum at the same amount of output at which the

A. average product is at a minimum.

B. marginal product is at a minimum.

C. marginal product is at a maximum.

D. average product is at a maximum.

Expert Solution

The correct option is D. The average product is at a maximum.

According to the cost theory, the firm achieves the lowest/minimum average variable cost when its average product reaches the maximum level. Thus, it can be stated that the average variable cost and the average product are inversely related to each other.

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