Mr Hudson Notes That If He Produces 10 Pairs of Shoes

question 78

Multiple Choice

Mr. Hudson notes that if he produces 10 pairs of shoes per day, his average fixed cost ( AFC ) is $14 and his marginal cost $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:

NPV

Net Present Value, a financial metric that calculates the difference between the present value of cash inflows and outflows over a period of time.

Opportunity Cost

The loss of potential gain from other alternatives when one alternative is chosen.

Interest Rate

The cost of borrowing money or the payment received for deposit funds, usually expressed as an annual percentage of the principal.

Wine Barrels

Standardized wooden or metal barrels used for aging, storing, and transporting wine.