Your second question here is not hard to answer. The answer is that the average variable cost of producing 5 units of this product is $34.40 if the fixed costs are $80. Let us see why this is so.
There are two kinds of costs that go into making a product. These are variable costs, which change depending on how many units are produced, and fixed costs, which remain constant no matter how many units are produced. There are no other kinds of costs. The table in your question shows us that the total costs of making 5 units are $252. If $80 of those costs is fixed costs, the remainder must be variable. Since 252-80 = 172, we can see that the total variable cost of making 5 units is $172. But we are asked for average variable cost, not total variable cost. Therefore, we take the total variable cost of $172 and divide it by 5. This tells us that the average variable cost is $34.40.
The first question is somewhat more difficult as it requires two steps. First, we have to determine how many units the monopolist should sell. The way to do that is to compare the total revenue and the total costs. The monopolist should maximize profit by producing the number of units of output where the difference between the total revenue and the total costs will be highest. In other words, we need to subtract total costs from total revenue for each level of output and see which is highest. As it turns out, profit is highest for five units of output. At that level, revenues are $123 higher than costs, which is slightly better than the profit for four units of output, where the revenues are $122 higher than the costs.
So, we now know that the monopolist needs to sell 5 units. Which of the prices given will allow the monopolist to sell 5 units? If we look at the table, we see that the total revenue for five units was $375. When we divide 375 by 5, we get 75 as the dividend. That means that each of the five units must have sold for $75. Thus, Option D is your correct answer.
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