What are the average variable costs of producing 3 units of output?

To determine the average variable costs of producing 3 units of output, you first need to understand what average variable costs (AVC) represent. AVC is calculated by dividing total variable costs by the number of units produced. Variable costs are the costs that change with the level of output, such as materials and labor directly associated with production.

If the average variable cost is stated as $2, this indicates that for each unit of output produced, the variable costs average out to $2. Therefore, if 3 units are produced, the total variable costs would be calculated as ( 3 \text{ units} \times 2 \text{ dollars/unit} = 6 \text{ dollars} ). When evaluating average costs, consistency in the per-unit cost during that production level signifies the maintenance of efficiency and stable input costs.

In this scenario, a value of $2 as the average variable cost reflects an optimal production parameter, potentially indicating that the firm is operating within its efficient scale during the output of three units. This understanding emphasizes the relationship between production levels and cost management, showcasing why the average variable cost aligns with the provided choice.