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.If Pat purchases 3 mixers and bakes 400 cakes per day,what is her average fixed cost?
A)$0.05
B)$2.50
C)$5.00
D)$6.25

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.If Pat purchases 3 mixers and bakes 400 cakes per day,what is her average fixed cost?
A)$0.05 
B)$2.50 
C)$5.00 
D)$6.25

Quizplus · Accepted Answer

Average fixed cost is calculated by dividing the total fixed cost by the quantity of output. If Pat purchases 3 mixers, the fixed cost is $2,500. Dividing $2,500 by 400 cakes gives an average fixed cost of $6.25 per cake.

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