The Average Variable Cost of Producing 250 Sundaes Is $5

question 290

Multiple Choice

The average variable cost of producing 250 sundaes is $5. At this level of output, average variable cost is minimized. Which of the following statements is true?

• A) Marginal cost of the 251st sundae is $1,250.
• B) Average total cost is minimized at an output greater than 250 sundaes.
• C) Average fixed cost is minimized at an output less than 250 sundaes.
• D) Total cost of producing 250 sundaes is $1,250.

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Definitions:

Average Tax Rate

The percentage of total income that is paid in taxes, calculated by dividing the total amount of taxes paid by total income.

Capital Gains

The profit realized from the sale of assets or investments that have increased in value over their purchase price.

Non-Eligible Dividends

Dividends that do not qualify for the enhanced dividend tax credit in certain jurisdictions, often associated with smaller businesses.

Average Tax Rate

The proportion of total income that an individual or corporation pays in taxes, calculated by dividing the total tax by the taxable income.