Jerry's ice-cream parlor is hosting Andrew's birthday party in one week.Overall,25 to 30 people will attend the party and Andrew's costs are as follows: $200 for rent,$150 for the cake,$3 per person for customized invitations,$15 per person for the meal,$50 for decorations,and $8 per person for party favors.For simplicity,assume that Andrew is considered one of the guests and he receives an invitation too.What happens with the average fixed cost when the number of guests increases from 25 to 30?
A) decreases from $42 to $39.33
B) decreases from $16 to $13.33
C) increases from $16 to $42
D) increases from $3 to $5
E) stays the same

Question

Quizplus · Accepted Answer

The average fixed cost is the total cost divided by the number of guests.

When there are 25 guests:

Total cost = $200 + $150 + ($3 * 25) + ($15 * 25) + $50 + ($8 * 25) = $975

Average fixed cost = $975 / 25 = $39

When there are 30 guests:

Total cost = $200 + $150 + ($3 * 30) + ($15 * 30) + $50 + ($8 * 30) = $1205

Average fixed cost = $1205 / 30 = $40.17

Therefore, the average fixed cost decreases from $16 to $13.33.

Choice B is the correct answer.

Jerry's Ice-Cream Parlor Is Hosting Andrew's Birthday Party in One