What is the variable cost?
Suppose the total cost of producing 15,000 tennis balls is $30,000 and the fixed cost is $10,000.
a. What is the variable cost?
b. When output is 15,000, what are the average variable cost and the average fixed cost?
c. Assume that the cost curves have the usual shape. Is the dollar difference between the average total cost and the average variable cost greater when the output is 15,000 tennis balls or when the output is 30,000 tennis balls? Explain.