Answer the Question on the Basis of the Following Cost

question 232

Multiple Choice

Answer the question on the basis of the following cost data. $\begin{array} { | c | c | c | } \hline \text { Output } & \text { Average Fixed Cost } & \text { Average Variable Cost } \\\hline 1 & \$ 50.00 & \$ 100.00 \\\hline 2 & 25.00 & 80.00 \\\hline 3 & 16.67 & 66.67 \\\hline 4 & 12.50 & 65.00 \\\hline 5 & 10.00 & 68.00 \\\hline 6 & 8.37 & 73.33 \\\hline 7 & 7.14 & 80.00 \\\hline 8 & 6.25 & 87.50 \\\hline\end{array}$ The average total cost of five units of output is

• A) $69.
• B) $78.
• C) $3.
• D) $10.

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Definitions:

Binding Price Ceilings

Government-imposed price limits that are set below the market equilibrium price, leading to shortages.

Market Efficiency

A condition in which market prices fully reflect all available information and assets are priced accordingly.

Price Ceiling

A government-imposed limit on how high a price can be charged on a product or service, typically set below the equilibrium price to make goods more affordable.

Quantity Demanded

The total amount of a good or service that consumers are willing and able to purchase at a given price over a specified period.