(Table: Costs for Birthday Cakes) Annie has a bakery that specializes in birthday cakes, and her variable costs of producing cakes are shown in the table Costs of Birthday Cakes.Assume that her fixed costs are $10.The minimum average total cost occurs at what output?
A)6
B)5
C)3
D)2

Question

Quizplus · Accepted Answer

The minimum average total cost occurs when the average total cost (ATC) is at its lowest. To find this, calculate ATC for each output level by adding fixed costs to variable costs and dividing by the number of cakes. The output level with the lowest ATC is the correct answer.

(Table: Costs for Birthday Cakes) Annie Has a Bakery That