Use the following scenario to answer the following questions:
Chuck Diesel Burger is a food truck in Houston,Texas.Imagine that Chuck Diesel Burger's minimum average total cost (ATC)is $3.75 and that its minimum average variable cost (AVC)is $2.50.Assume there are no barriers to entrer into or exit from the food-truck market.
-Chuck Diesel Burger will break even if the price is equal to
A) $4.00.
B) $3.75.
C) $3.00.
D) $2.50.
E) $2.00.

Question

Quizplus · Accepted Answer

Chuck Diesel Burger's minimum average total cost (ATC) is $3.75 and minimum average variable cost (AVC) is $2.50. Therefore, the minimum price for Chuck Diesel Burger to cover all its costs (including variable and fixed costs) and break even would be equal to its minimum ATC, which is $3.75. Hence, the correct choice is B.

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