To find the average variable cost at the current output level, we divide the total variable costs by the number of units produced.
Average Variable Cost = Total Variable Costs / Output Quantity
In this case, the total variable costs are $2 million and the output quantity is 4 million units.
Average Variable Cost = $2 million / 4 million units = $0.50 per unit
Therefore, the average variable costs at this firm's current output level are $0.50 per unit.
Suppose that a company currently employs 1 comma 000
workers and produces 4
million units of output per month. Labor is its only variable input, and the company pays each worker the same monthly wage. The company's current total variable costs equal $2
million.
Part 2
What are average variable costs at this firm's current output level?
1 answer