Asked by Ariel Kirkpatrick on Jun 28, 2024

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Refer to Figure 9.1. If this farmer maximizes profits, his average fixed costs will be

A) $2.
B) $7.
C) $11.
D) $24.

Fixed Costs

Costs that do not change with the level of output produced, such as rent, salaries, or insurance expenses.

Maximizing Profits

The process of increasing the difference between revenue and costs to achieve the highest possible financial gain.

  • Gain insight into the determination of fixed and variable expenditures within business environments.
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ZK
Zybrea KnightJul 04, 2024
Final Answer :
A
Explanation :
Without access to Figure 9.1, we can deduce the correct answer based on the principle that average fixed costs (AFC) decrease as output increases. Since the question implies the farmer is maximizing profits, he is likely operating at a higher level of output. Among the given options, $2 is the lowest AFC, which aligns with the concept of profit maximization leading to higher output and thus lower AFC.