Use the following to answer question:
-(Table: Cakes)Use Table: Cakes.Pat is opening a bakery to make and sell special birthday cakes.She is trying to decide how many mixers to purchase.Her estimated fixed and average variable costs if she purchases 1,2,or 3 mixers are shown in the table.Assume that average variable costs do not vary with the quantity of output.How many mixers should Pat buy to get the lowest average total cost if she plans to make 200 cakes?
A)1
B)2
C)3
D)Can't be determined without more information

Question

Use the following to answer question: 
-(Table: Cakes)Use Table: Cakes.Pat is opening a bakery to make and sell special birthday cakes.She is trying to decide how many mixers to purchase.Her estimated fixed and average variable costs if she purchases 1,2,or 3 mixers are shown in the table.Assume that average variable costs do not vary with the quantity of output.How many mixers should Pat buy to get the lowest average total cost if she plans to make 200 cakes?
A)1 
B)2 
C)3 
D)Can't be determined without more information

Quizplus · Accepted Answer

To determine the lowest average total cost, we need to find the point where the total cost is the lowest per unit of output. The table shows that if Pat purchases one mixer, the total cost for making 200 cakes would be $740, resulting in an average total cost of $3.70 per cake. If she purchases two mixers, the total cost for making 200 cakes would be $720, resulting in an average total cost of $3.60 per cake. If she purchases three mixers, the total cost for making 200 cakes would be $750, resulting in an average total cost of $3.75 per cake. Therefore, Pat should purchase two mixers to get the lowest average total cost.

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