Liam Notes That If He Produces 10 Pairs of Shoes

question 31

Multiple Choice

Liam notes that if he produces 10 pairs of shoes per day, his average fixed cost (AFC) is $14 and his marginal cost (MC) is $8; if he produces 20 pairs of shoes per day, his MC is $15. What is his AFC when output is 20 pairs of shoes per day?

• A) $5
• B) $7
• C) $8
• D) $15

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Definitions:

Present Value

The present valuation of a series of future cash inflows or a one-time sum, based on a specified rate of return.

Interest Rate

The proportion of a loan that is charged as interest to the borrower, typically expressed as an annual percentage of the loan balance.

Present Value

The current worth of a future sum of money or stream of cash flows given a specified rate of return, considering the time value of money.

Individual Retirement Account

A tax-advantaged investing tool that individuals use to earmark funds for retirement savings.