If total cost at \( \mathrm{Q}=0 \) is \( \$ 100 \) and total cost at \( \mathrm{Q}=10 \) is \( \$ 500 \), then average variable cost at \( \mathrm{Q}=10 \) is \( \$ 500 \) \( \$ 400 \) \( \$ 50 \) \( \$ 40 \) \( \$ 10 \)

To find the average variable cost (AVC) at \( Q=10 \), we first need to determine the total variable cost. The total variable cost can be calculated by subtracting the total fixed cost from the total cost. Here, total fixed cost (when \( Q=0 \)) is \( \$100 \). So, total variable cost at \( Q=10 \) is \( Total Cost - Total Fixed Cost = 500 - 100 = 400 \). Now, we divide this total variable cost by the quantity produced (\( Q=10 \)) to find the AVC: \[ AVC = \frac{Total Variable Cost}{Q} = \frac{400}{10} = \$40. \] Therefore, the average variable cost at \( Q=10 \) is \( \$40 \). The correct answer is \( \$40 \). Understanding fixed and variable costs can be a game changer in economics! Fixed costs are expenses that don't change with production levels—like rent or salaries—while variable costs vary with production volume. This distinction helps businesses make more informed pricing and production decisions. For a practical approach to controlling costs, regularly reviewing both fixed and variable expenses allows businesses to identify and cut unnecessary costs. Common mistakes often include misclassifying costs or failing to account for changes in variable costs as production scales, which can lead to inaccurate pricing strategies.