Let’s walk through the solution step-by-step:
1. Identify Fixed Cost:
- Fixed cost is the cost incurred when the output is zero. From the table, when the output is 0, the total cost is \[tex]$44. Therefore, the fixed cost is:
\[
\text{Fixed cost} = \$[/tex]44
\]
2. Calculate Total Variable Cost for 3 Units of Output:
- Total cost when producing 3 units is \[tex]$67.
- Total variable cost (TVC) is the total cost minus the fixed cost. For 3 units:
\[
\text{TVC} = \text{Total cost}_{(3 \text{ units})} - \text{Fixed cost}
\]
\[
\text{TVC} = \$[/tex]67 - \[tex]$44 = \$[/tex]23
\]
3. Calculate Average Variable Cost (AVC):
- The average variable cost is the total variable cost divided by the number of units produced. For 3 units:
[tex]\[
\text{AVC} = \frac{\text{TVC}}{\text{Number of units}}
\][/tex]
[tex]\[
\text{AVC} = \frac{\$23}{3}
\][/tex]
[tex]\[
\text{AVC} \approx \$7.67
\][/tex]
Therefore, the average variable cost of producing 3 units of output is approximately \$7.67.
