Use the Following to Answer Questions

question 30

Multiple Choice

Use the following to answer questions:
-(Table: Cakes) Look at the 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 one, two, or three mixers are shown in the table. Assume that average variable costs do not vary with the quantity of output. If Pat purchases one mixer and bakes 200 cakes per day, what is her average total cost?

• A) $5
• B) $15
• C) $200
• D) $1,000

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Definitions:

Profit-maximizing

The process of adjusting production and operational variables to achieve the highest possible profit margins.

Vertical Distance

The measure of the difference in height between two points, often used in mathematics and geography.

Unit Price

The cost per unit of quantity of a product, allowing consumers to compare prices between different sized packages of the same item.

Competitive Firm

A business that operates in a market where it must compete against other firms for customers and resources.