The Wacky Widget Company Has Total Fixed Costs of $100,000

question 339

Multiple Choice

The Wacky Widget company has total fixed costs of $100,000 per year. The firm's average variable cost is $5 for 10,000 widgets. At that level of output, the firm's average total costs equal

• A)$10
• B)$15
• C)$100
• D)$150

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Definitions:

Creditors

Entities or individuals to whom a company owes money or has financial liabilities, often in the context of short or long-term borrowing.

Contract Rate

Rate of interest (based on face value) stated on bond certificate and bond indenture.

Market Rate

The prevailing interest rate available in the marketplace for instruments of similar risk and maturity, also known as the "market interest rate."

Bonds

Financial instruments representing a loan made by an investor to a borrower, often corporate or governmental, that pays periodic interest and the principal at maturity.