The Table Below Shows Output, Marginal Cost, and Average Variable

question 5

Multiple Choice

The table below shows output, marginal cost, and average variable cost for the production of pairs of shoes. All costs are in dollars. $$\begin{array}{l}\begin{array} { | l | l | l | } \hline \text { Output } & \begin{array} { l } \text { Marginal } \\\text { Cost }\end{array} & \begin{array} { l } \text { Average } \\\text { Variable Cost }\end{array} \\\hline 50 & 60 & 140 \\\hline 70 & 45 & 115 \\\hline 90 & 35 & 95 \\\hline 110 & 30 & 80 \\\hline 130 & 35 & 65 \\\hline 150 & 60 & 60 \\\hline 170 & 105 & 65 \\\hline 190 & 180 & 75 \\\hline 210 & 230 & 90 \\\hline 230 & 290 & 110 \\\hline\end{array}\\\text { TABLE 7- } 6\end{array}$$
-Refer to Table 7- 6. Suppose this firm is producing 210 pairs of shoes per time period and that the variable factor of production is labour. Which of the following statements best describes this firm's production?

• A) Additional units of labour employed will increase the average variable cost of producing shoes.
• B) The firm is producing below its capacity.
• C) Marginal cost is higher than average variable cost, so marginal product must be rising.
• D) Marginal cost is higher than average variable cost, so average product must be rising.
• E) Each additional unit of labour employed reduces the average variable cost of the pairs of shoes.

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