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Refer to the table below
Refer to the table below. The average total cost at the profit-maximizing level of output equals:
a. $53.00,
b. $58.33,
c. $59.00,
d. $51.50,
e. There is not enough information given to answer this question.
| Quantity | Total revenue | Total cost |
| 2 | 200 | 150 |
| 3 | $270 | $175 |
| 4 | $328 | $206 |
| 5 | $375 | $252 |
| 6 | $390 | $312 |
Expert Solution
See below.
Profit = Revenue - Cost
| Quantity | Total revenue | Total cost | Profit ($) |
|---|---|---|---|
| 2 | 200 | 150 | 50 |
| 3 | $270 | $175 | 95 |
| 4 | $328 | $206 | 122 |
| 5 | $375 | $252 | 123 |
| 6 | $390 | $312 | 78 |
The profit-maximizing level of output is thus 5 units since it has the highest profit.
Average total cost = Total cost / Number of units
= 252 / 5
=$50.40
The answer is thus none of the above.
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