Determine the average (mean) of $\frac{1}{2}, \frac{1}{4}$ and $\frac{1}{8}$ as a fraction in lowest terms.
By definition, the mean is $\frac{\frac{1}{2}+\frac{1}{4}+\frac{1}{8}}{3}=\frac{\frac{4}{8}+\frac{2}{8}+\frac{1}{8}}{3}=\frac{7 / 8}{3}=\frac{7}{24}$.

ANSWER: $\frac{7}{24}$