The Accompanying Table Shows a Pizzeria's Fixed Cost and Variable

question 23

Multiple Choice

The accompanying table shows a pizzeria's fixed cost and variable cost at different levels of output. Pizzas sell for $20 each.  
When the pizzeria makes 100 pizzas a day, its fixed cost is ________ and its total cost is ________.

• A)$350; $850
• B)$500; $850
• C)$500; $1,350
• D)$850; $1,650

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Definitions:

Total Variable Costs

The sum of all costs that vary with the level of output, including materials, labor, and other expenses that increase or decrease as production changes.

Natural Monopoly

A market condition where due to high fixed costs or unique resources, a single company can supply a product or service at a lower cost than any potential competitor, thus dominating the market.

Unit Costs

The price a business incurs for the production, storage, and distribution of a single unit of a certain product or service.

Minimum Efficient Scale

The smallest amount of production a company can achieve while still taking full advantage of economies of scale regarding costs per unit of output.