Exhibit 7-12 Cost schedule for producing pizza
Pizzas
FixedCost
VariableCost
TotalCost
0
$
$
$
1
48
2
17
3
27
4
78
5
40
6
64
7
80
In Exhibit 7-12, the marginal cost of producing the 3rd pizza
A. is higher than the average total cost of 3 pizzas, so the average total cost curve is increasing at a quantity of 3 pizzas.
B. is lower than the average total cost of 3 pizzas, so the average total cost curve is decreasing at a quantity of 3 pizzas.
C. is equal to the average total cost of 3 pizzas, so the average total cost curve is minimized at a quantity of 3 pizzas.
D. is higher than the average fixed cost of 3 pizzas, so the average fixed cost curve is increasing at a quantity of 3 pizzas.
Answer: B
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