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Economics

posted by 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.

  • Economics - ,

    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.

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