Answer (D) is correct . If total variable cost is $400 for 5 units, the average variable cost is $80. The average fixed cost is $40 ($200 ¡Â 5), and the average total cost is $120 ($80 + $40).Answer (A) is incorrect because The marginal cost cannot be accurately determined from the information given but is most likely equal to the $80 of unit variable cost.
Answer (B) is incorrect because The average total cost is $120.
Answer (C) is incorrect because The average fixed cost is $40.
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