Table 11-3 Table 11-3 Shows the Demand and Cost Schedules for a Price

question 169

Multiple Choice

Table 11-3
$\begin{array}{|c|c|c|c|c|}\hline \text { Quantity } & \begin{array}{c}\text { Price } \\\text { (dollars) }\end{array} & \begin{array}{c}\text { Total Revenue } \\\text { (dollars) }\end{array} & \begin{array}{c}\text { Total Variable } \\\text { Cost (dollars) }\end{array} & \begin{array}{c}\text { Total Cost } \\\text { (dollars) }\end{array} \\\hline 0 & \$ 21 & \$ 0 & \$ 0 & \$ 50 \\\hline 1 & 20 & 20 & 16 & 66 \\\hline 2 & 19 & 38 & 31 & 81 \\\hline 3 & 18 & 54 & 45 & 95 \\\hline 4 & 17 & 68 & 59 & 109 \\\hline 5 & 16 & 80 & 75 & 125 \\\hline 6 & 15 & 90 & 93 & 143 \\\hline 7 & 14 & 98 & 112 & 162 \\\hline 8 & 13 & 104 & 140 & 190 \\\hline 9 & 12 & 108 & 180 & 230 \\\hline 10 & 11 & 110 & 230 & 280 \\\hline\end{array}$ Table 11-3 shows the demand and cost schedules for a monopolistically competitive firm.
-Refer to Table 11-3.What is its average variable cost of production at its optimal output level?

• A) $0 (because its optimal output = 0)
• B) $15
• C) $14.75
• D) $29

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Definitions:

Franchise Fees

Payments made by franchisees to franchisors, typically in exchange for the right to use the franchisor's business model and branding.

Nonexcludable

describes a good or service that cannot be withheld from individuals who do not pay for it, characteristic of public goods.

Free Riders

Individuals who benefit from resources, goods, or services without paying for them, relying on others to bear the cost.

Private Firm

A business owned by private individuals or groups, not controlled by the government, and operated for profit.