For a cost function C = 100 + 10Q + Q2, the average variable cost of producing 20 units of output is
A. 10
B. 20
C. 30
D. None of the statements associated with this question are correct
Plug 20 into your formula for total costs, then calculate average variable cost. Remember, the 100 in the total cost represents fixed costs.
30
important for class discussion
To find the average variable cost of producing 20 units of output, we need to calculate the variable cost and then divide it by the quantity of output.
Variable cost is the part of total cost that varies with the level of output. In this cost function, the variable cost is given by 10Q + Q^2.
To calculate the variable cost of producing 20 units of output, we substitute Q = 20 into the cost function:
Variable cost = 10(20) + (20)^2
= 200 + 400
= 600
Now, we can calculate the average variable cost by dividing the variable cost by the quantity of output:
Average variable cost = Variable cost / Quantity of output
= 600 / 20
= 30
Therefore, the average variable cost of producing 20 units of output is 30.
So the correct answer is:
C. 30