Average total cost increases

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Reference no: EM13898686

Steve owns a bike store. His total costs are $1.2 million per year, his variable costs are $750,000, and his fixed costs are $450,000 per year. Last year, Steve sold 1,200 bikes. If Steve sells 1,250 bikes this year (50 more than last year) and his average total cost increases to $1.28 million, we know that the:

A) average variable cost of selling bikes has decreased.

B) average total cost of selling 1,250 bikes is $1,000.

C) marginal cost of those 50 bikes is $1.28 million.

D) marginal cost of those 50 bikes is $80,000.

E) average fixed cost of selling bikes is unchanged.

Reference no: EM13898686

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