Suppose a local food truck owner incurs a total cost of $200 per month even if h

Question

Suppose a local food truck owner incurs a total cost of $200 per month even if he makes and sells no food, but that his total cost rises to $202 if he makes and sells one hamburger. Which of the following is true? Select one: a. His variable cost is $200, and the fixed cost of the first hamburger is $2. b. His fixed cost is $200, and the marginal cost of the first hamburger is $202. O O O C. His marginal cost is $200, and the average cost of the first hamburger is $2. d. His fixed cost is $200, and the marginal cost of the first hamburger is $2.

Explanation / Answer

According to the question, the truck owner has to bear the cost of $200, even if he does not sell any hamburger. This is his fixed cost, because it has to be borne by him, no matter how many hamburgers he sells.

If he sells one hamburger, total cost is $202, that means the cost of producing one burger, the marginal cost is $2($202-$200).

option d

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