Straker Industries Estimated Its Short-Run Costs Using a U-Shaped Average

question 14

Multiple Choice

Straker Industries estimated its short-run costs using a U-shaped average variable cost function of the form and obtained the following results.Total fixed cost TFC) at Straker Industries is $1,000. At what level of output is average variable cost AVC) at its minimum point for Straker Industries?

• A)0.14
• B)4.7
• C)7
• D)14
• E)28

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Definitions:

Transform Faulting

A type of strike-slip fault where two tectonic plates slide past each other horizontally, typically found at mid-ocean ridges.

Mid-Ocean Ridge

An underwater mountain range, formed by plate tectonics, where new oceanic crust is created through volcanic activity.

Seafloor Spreading

A geologic process where new oceanic crust is formed at mid-ocean ridges and slowly moves away from the ridge, contributing to continental drift.

Subduction

The process by which one tectonic plate moves under another, sinking into the Earth's mantle.