Why Choose Us?
0% AI Guarantee
Human-written only.
24/7 Support
Anytime, anywhere.
Plagiarism Free
100% Original.
Expert Tutors
Masters & PhDs.
100% Confidential
Your privacy matters.
On-Time Delivery
Never miss a deadline.
You run a business producing picture frames
You run a business producing picture frames. This month your total cost of production is $10,000, your variable cost of production is $6,000, and you produce 3,000 picture frames. It follows that the average _____ cost is _____.
a) total; $3
b) fixed; $1
c) variable; $2
d) total; $1
Expert Solution
The correct answer is c). The average variable cost is $2.
The variable cost is given as $6,000.
The average variable cost (AVC) is the variable cost divided by the number of units produced:
AVC=VCQAVC=$6,0003,000AVC=$2AVC=VCQAVC=$6,0003,000AVC=$2
Answer a is incorrect because the average total cost is $3.33$3.33 and not $3$3.
Answer b is incorrect because the average fixed cost is $1.33$1.33.
And finally, answer c is incorrect because the average total cost is $3.33$3.33 and not $1$1.
Production Costs:
Production costs are categorized as fixed and variable costs. Fixed costs do not change as the production quantity increases and include the cost of equipment and buildings. Variable costs occur as a unit is made and include materials and labor. The total cost is the sum of the fixed and variable costs.
Archived Solution
You have full access to this solution. To save a copy with all formatting and attachments, use the button below.
For ready-to-submit work, please order a fresh solution below.
