Suppose flora bakery is the monopolist in the market for banana bread. It’s fixed cost is 3 million. While it’s labour cost and ingredients for producing each pound of banana bread are $60 and $40 respectively.
Consumer are unwilling and unable to buy any banana bread when the price is $300 or above, however, the quantity demanded increases by 1000 pounds for each dollar the price drops.
How to calculate the marginal cost, average total cost?
i'm not sure but clue that the marginal cost is what you should search on google
To calculate the marginal cost and average total cost for Flora Bakery, we need to understand a few concepts and use the given information.
1. Marginal Cost (MC):
The marginal cost measures the change in cost when one additional unit of output is produced. It is calculated as the change in total cost divided by the change in quantity.
MC = Change in Total Cost / Change in Quantity
2. Average Total Cost (ATC):
The average total cost represents the total cost per unit of output. It is calculated by dividing the total cost by the quantity produced.
ATC = Total Cost / Quantity
Given Information:
Fixed Cost (FC) = $3,000,000
Labour Cost (LC) per pound = $60
Ingredient Cost (IC) per pound = $40
Consumer Demand: 1000 pounds increase for each dollar drop in price when price is below $300
To calculate the MC and ATC, we need to know the quantity produced. However, the given information does not provide the quantity produced. Hence, we cannot calculate MC and ATC without additional information about the quantity produced.
If you have some specific information about the quantity produced, please provide it so that we can calculate the MC and ATC for you.