If producing 9 units incurs a total variable cost of $90 and producing 10 units incurs $120, what is the average variable cost of 9 units?

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Study for the University of Central Florida ECO2023 Principles of Microeconomics Final. Prepare with multiple choice questions, flashcards with helpful hints and explanations. Ace your exam!

To determine the average variable cost (AVC) of producing 9 units, you start by taking the total variable cost associated with producing those units and dividing it by the number of units produced. The total variable cost of producing 9 units is $90.

The formula to calculate average variable cost is:

[ \text{Average Variable Cost} = \frac{\text{Total Variable Cost}}{\text{Quantity of Output}} ]

Plugging in the numbers:

[ \text{Average Variable Cost} = \frac{90}{9} = 10 ]

Thus, the average variable cost of producing 9 units is $10. This indicates that, on average, it costs $10 in variable costs to produce each of the 9 units.

The correct answer reflects the proper calculation of average variable costs, highlighting a crucial concept in microeconomics that helps businesses assess their production efficiency and cost management. Understanding AVC is essential for making decisions about production levels, pricing, and overall business strategy.