Economics
posted by Matthew on .
Hi there,
I am having trouble with this problem.Can you give me some guidance.
In planning the publication of a new engineering economics textbook, the publisher has identified the following fixed and variable costs.
Fixed Costs
Overhead $10,000
Editing and Typesetting $100,000
Author's Fee $10,000
Variable Costs
Printing/binding $25/copy on first
5000 copies
$20/copy on copies
above 5000
Author's royalty $2/copy
Warehousing/distribution$1/Copy
If the publisher prints 4000 copies, determine the average and marginal cost per copy. What are these costs if the publisher prints 7500 copies.
Thank you.

In your problem:
total fixed costs (TFC) are 120,000
total variable costs (TVC) are 4000*(25+2+1) = 112,000
Total costs are 120,000+112,000=232,000
Average costs are 232,000/4000 = 58.
Marginal costs are the cost of producing one more book = 25+2+1 = 28.
Ok, now repeat for the 7500 production case. Take it from here.