To determine the average variable cost (AVC) when 5 units of output are produced, we need to use the following formula:
[tex]\[ \text{AVC} = \frac{\text{Total Variable Cost}}{\text{Output}} \][/tex]
From the table, we see that the Total Variable Cost (TVC) for producing 5 units is [tex]$2000.
Using the formula:
\[ \text{AVC} = \frac{\$[/tex]2000}{5} \]
Performing the division:
[tex]\[ \text{AVC} = \$400 \][/tex]
So, the average variable cost of the firm when 5 units of output are produced is:
[tex]\[ \$400 \][/tex]
Among the given options:
- \[tex]$300
- \$[/tex]100
- \[tex]$200
- \$[/tex]400
The correct answer is:
[tex]\[ \$400 \][/tex]
