A company finds that producing 12 items costs $31, while producing 7 items costs $25.

What's the company's marginal cost?

To find the company's marginal cost, we need to calculate the change in cost when the number of items produced increases by one.

First, let's find the cost per item for producing 12 items. We divide the total cost of producing 12 items ($31) by the number of items produced (12).

Cost per item for producing 12 items = $31 / 12 = $2.58 (rounded to two decimal places)

Next, let's find the cost per item for producing 7 items. We divide the total cost of producing 7 items ($25) by the number of items produced (7).

Cost per item for producing 7 items = $25 / 7 = $3.57 (rounded to two decimal places)

To find the marginal cost, we subtract the cost per item for producing 7 items from the cost per item for producing 12 items.

Marginal Cost = $2.58 - $3.57 = -$0.99 (rounded to two decimal places)

The company's marginal cost is -$0.99. Since the result is negative, it suggests that the cost decreases as the number of items produced increases. This negative marginal cost might indicate economies of scale, where production efficiency improves with larger quantities.