Consider the following costs of owning and operating a car. A $17,000 Fiat 500 Pop financed over 60 months at 6 percent interest means a monthly payment of $329. Insurance costs $140 a month regardless o how much you drive. The car gets 20 miles per gallon and uses regular-grade gasoline that costs $2.30 per gallon. Finally, suppose that wear and tear on the car costs about $0.10 a mile. Which costs are fixed, and which are variable? O A. Fixed costs are the monthly car payment and the cost of insurance; variable costs are the cost of gasoline and costs associated with wear and tear. O B. Fixed cost is the monthly car payment, variable costs are the cost of insurance, the cost of gasoline, and costs associated with wear and tear. O C. Fixed costs are the monthly car payment, the cost of insurance, and costs associated with wear and tear; variable costs are the cost of gasoline. O D. Fixed costs are the monthly car payment, the cost of insurance, and the cost of gasoline; variable costs are the costs associated with wear and tear.

Consider the following costs of owning and operating a car. A $17,000 Fiat 500 Pop financed over 60 months at 6 percent interest means a monthly payment of $329. Insurance costs $140 a month regardless o how much you drive. The car gets 20 miles per gallon and uses regular-grade gasoline that costs $2.30 per gallon. Finally, suppose that wear and tear on the car costs about $0.10 a mile. Which costs are fixed, and which are variable? O A. Fixed costs are the monthly car payment and the cost of insurance; variable costs are the cost of gasoline and costs associated with wear and tear. O B. Fixed cost is the monthly car payment, variable costs are the cost of insurance, the cost of gasoline, and costs associated with wear and tear. O C. Fixed costs are the monthly car payment, the cost of insurance, and costs associated with wear and tear; variable costs are the cost of gasoline. O D. Fixed costs are the monthly car payment, the cost of insurance, and the cost of gasoline; variable costs are the costs associated with wear and tear.

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter4: Extent (how Much) Decisions

Section: Chapter Questions

Problem 4.5IP

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