The total variable cost (TVC) of a firm at some levels of output is given below:
| Output (units) | 5 | 6 | 7 | 8 |
|---|---|---|---|---|
| TVC (Rs) | 33 | 39 | 47 | 60 |
Among these levels, at which output is the average variable cost (AVC) the lowest?
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → 6 units
AVC is TVC per unit of output. Work it out at each level and pick the smallest.
\( q = 5:\ 33/5 = 6.6 \)
\( q = 6:\ 39/6 = 6.5 \)
\( q = 7:\ 47/7 \approx 6.71 \)
\( q = 8:\ 60/8 = 7.5 \)
AVC is lowest, Rs 6.5, at 6 units. TVC itself is lowest at 5 units, but that is not AVC.
NCERT (2026-27): “3.7.1 Short Run Costs … Similarly, the average variable cost (AVC) is defined as the total variable cost per unit of output. …”
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