Question

Use the following table to answer questions 12 and 13. Data for LIM Aviation Number of flights per day Daily Total Costs 0 $1000 1 $1100 2 $1150 3 $1250 4 $1400 5 $1600 6 $1850 7 $2150 8 $2500 9 $2900 12.

A)What are LIM Aviation’s fixed costs? A. $1100 per day B. $100 per day C. $1000 per day D. $1150 per day 13.

B)What is the marginal cost of the 5th daily flight? A. $200 B. 520 C. 250 D. 150

Answer 1

Following is the provided table -

Number of Flights per day	Daily Total Costs
0	$1,000
1	$1,100
2	$1,150
3	$1,250
4	$1,400
5	$1,600
6	$1,850
7	$2,150
8	$2,500
9	$2,900

Question 12

The total cost at zero level of output is the total fixed cost.

The daily total cost corresponding to zero flights per day is $1,000. This is the fixed cost of LIM aviation.

Thus,

LIM Aviation's fixed costs is $1,000 per day.

Hence, the correct answer is the option (C).

Question 13

The daily total cost of 4 flights is $1,400.

The daily total cost of 5 flights is $1,600.

Calculate the marginal cost of the 5th daily flight -

Marginal cost of the 5th daily flight = Daily total cost of 5 flights - Daily total cost of 4 flights

Marginal cost of the 5th daily flight = $1,600 - $1,400 = $200

Thus,

The marginal cost of the 5th daily flight is $200.

Hence, the correct answer is the option (A).