Refer to Greene Enterprises, Inc $$A V C = 88 - 0.026 Q + 0.000003 Q ^ { 2 }$$

question 43

Multiple Choice

Refer to Greene Enterprises, Inc., whose manager recently estimated its average variable cost (AVC) function to be

$$A V C = 88 - 0.026 Q + 0.000003 Q ^ { 2 }$$
Greene Enterprises faces total fixed costs (TFC) of $300,000.
-At Greene Enterprises, average variable cost (AVC) reaches its minimum value at $________.

• A) $28.00
• B) $31.67
• C) $39.64
• D) $43.33
• E) $82.00

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Definitions:

Present Value Interest Factors

A factor used to calculate the present value of a single future payment or a series of future payments, discounted back to the present at a given interest rate.

Guaranteed Residual Value

The estimated value that a leased asset will have at the end of the lease term, as guaranteed by a third party or the lessee.

Maintenance Agreement

A contract between two parties in which one agrees to maintain an asset owned by the other party, in return for a fee.

Implicit Lease Rate

The interest rate assumed in the calculation of lease payments, not always explicitly stated in the lease agreement.