Use the Following to Answer Question

question 303

Multiple Choice

Use the following to answer question:
-(Table: Cakes) Use Table: Cakes.Pat is opening a bakery to make and sell special birthday cakes.She is trying to decide how many mixers to purchase.Her estimated fixed and average variable costs if she purchases 1,2,or 3 mixers are shown in the table.Assume that average variable costs do not vary with the quantity of output.If Pat purchases 3 mixers and bakes 200 cakes per day,what is her average fixed cost?

• A)$0.05
• B)$2.50
• C)$5.00
• D)$12.50

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Definitions:

Inelastic Supply

A scenario in which the amount of a product or service provided is not significantly affected by variations in its price.

Luxury Tax

A tax imposed on expensive goods which are considered non-essential, aimed at discouraging their purchase or generating government revenue from luxury items.

Elastic Demand

A condition in which the quantity demanded of a good or service greatly changes in response to changes in its price.

Inelastic Supply

A situation where the quantity of a good supplied by producers is relatively insensitive to changes in its price.