Posted by **Matthew** on Wednesday, January 21, 2009 at 8:30pm.

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 -
**economyst**, Thursday, January 22, 2009 at 9:58am
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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