Posted by ana on .
At a production level of 1400 items, the total cost is $7250 and the marginal cost is $25. Use this information to estimate the costs of producing the following number of items. Your answers should be whole numbers.
a) 1401 items .
b) 1399 items .
c) 1450 items .
I assume the "total cost" is "total fixed cost" since the marginal cost is higher than the "total cost" divided by the number of items.
So at the production level of 1400 items, total cost = total fixed cost + n*marginal cost
where n=number of items to be produced,
marginal cost = $25, and
total fixed cost = $7250