At its current output level, Pretty Flowers Florist has average fixed costs equal to $5.40 and average variable costs equal to $3.20. What is Pretty Flowers Florist's average total cost at their current output level?

A. $3.20

B. $7.30

C. $5.40

D. $8.60

The correct option is D: $8.60

Explanation:

Average fixed cost of Pretty Flowers = $5.40

Average variable costs of Pretty Flowers = $3.20

We are asked to calculate the Average total cost of Pretty Flowers at this current level

Hence:

Average total cost Pretty Flowers = Average fixed cost of Pretty Flowers + Average variable costs of Pretty Flowers

If we substitute the value of these variables in the equation, we get:

Average total cost Pretty Flowers = $5.40 + $3.20 = $8.60

D. $ 8.60

Explanation:

The question requires the average total cost at the current output level.

This would be the sum of the average variable cost and the average fixed cost at the current output level.

Average variable cost     $ 3.20

Average fixed cost          $ 5.40

Average total cost         $ 8.60