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The Total Fixed Cost for this scenario is [tex]$\$[/tex]500[tex]$.

\begin{tabular}{|l|l|}
\hline
Output & Total Variable Cost \\
\hline
1 & $[/tex]\[tex]$400$[/tex] \\
\hline
2 & [tex]$\$[/tex]720[tex]$ \\
\hline
3 & $[/tex]\[tex]$1,000$[/tex] \\
\hline
4 & [tex]$\$[/tex]1,400[tex]$ \\
\hline
5 & $[/tex]\[tex]$2,000$[/tex] \\
\hline
6 & [tex]$\$[/tex]3,600[tex]$ \\
\hline
\end{tabular}

Refer to the above table. The average variable cost of the firm when 5 units of output are produced is:

A. $[/tex]\[tex]$300$[/tex]

B. [tex]$\$[/tex]100[tex]$

C. $[/tex]\[tex]$200$[/tex]

D. [tex]$\$[/tex]400$



Answer :

GinnyAnswer
To determine the average variable cost (AVC) when 5 units of output are produced, we need to use the following formula:

[tex]\[ \text{AVC} = \frac{\text{Total Variable Cost}}{\text{Output}} \][/tex]

From the table, we see that the Total Variable Cost (TVC) for producing 5 units is [tex]$2000. Using the formula: \[ \text{AVC} = \frac{\$[/tex]2000}{5} \]

Performing the division:
[tex]\[ \text{AVC} = \$400 \][/tex]

So, the average variable cost of the firm when 5 units of output are produced is:

[tex]\[ \$400 \][/tex]

Among the given options:
- \[tex]$300 - \$[/tex]100
- \[tex]$200 - \$[/tex]400

The correct answer is:
[tex]\[ \$400 \][/tex]

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