Asked by Mashudu Trinity on Jul 22, 2024
Verified
Kaile Cakes produces 10 cakes per day.The marginal cost of the tenth cake is $24,and average total cost of 10 cakes is $6.The average total cost of 9 cakes is:
A) $4.
B) $5.
C) $6.
D) $8.
Marginal Cost
The boost in expenditure linked to creating an additional unit of a good or service.
Average Total Cost
Refers to the sum of all production costs divided by the total output produced, indicating the cost per unit of producing a good or service.
Cakes
Baked desserts that are typically sweet and made from ingredients such as flour, sugar, and eggs.
- Determine the sum of all fixed costs using the provided average total costs and average variable costs.
Verified Answer
PK
Prithvi KothakondaJul 23, 2024
Final Answer :
A
Explanation :
If the average total cost of 10 cakes is $6, then the total cost of producing 10 cakes is $60. If the marginal cost of the 10th cake is $24, then the total cost of producing 9 cakes is $36 ($60 - $24). Therefore, the average total cost of 9 cakes is $4 ($36/9). So, the correct answer is A.
Learning Objectives
- Determine the sum of all fixed costs using the provided average total costs and average variable costs.