If fixed cost is $8,000, variable cost is $5,000 at an output of 2 and $9,000 at an output of 3, how much is marginal cost at an output of 3?
Can someone show me how to do the formula step by step?
(13k/2)-(17k/3)= X
6.5k - 5.667k = X
X = .833k
srry
i posted i think wrong answer
answer is =$4,000
The change in cost from 2 to 3 units of output would be the marginal cost of unit 3. The difference is the difference in variable costs, $9,000 minus $5,000.
Thanks, Anonymous...Although I understand the concept I need to actually see the formula. I am a visual kindda person.
To calculate the marginal cost, you need to find the change in the total cost when the output increases by one unit. Here's how you can calculate it step by step:
Step 1: Calculate the total cost at an output of 2.
At an output of 2, the fixed cost is $8,000 and the variable cost is $5,000. Therefore, the total cost at an output of 2 can be calculated as:
Total Cost at 2 = Fixed Cost + Variable Cost at 2
= $8,000 + $5,000
= $13,000
Step 2: Calculate the total cost at an output of 3.
At an output of 3, the fixed cost is still $8,000, but the variable cost increases to $9,000. Therefore, the total cost at an output of 3 can be calculated as:
Total Cost at 3 = Fixed Cost + Variable Cost at 3
= $8,000 + $9,000
= $17,000
Step 3: Calculate the change in total cost.
The change in total cost is the difference between the total cost at an output of 3 and the total cost at an output of 2:
Change in Total Cost = Total Cost at 3 - Total Cost at 2
= $17,000 - $13,000
= $4,000
Step 4: Calculate the marginal cost.
The marginal cost is the change in total cost divided by the change in output. Since the change in output is 1 unit (from 2 to 3), the marginal cost can be calculated as:
Marginal Cost = Change in Total Cost / Change in Output
= $4,000 / 1
= $4,000
Therefore, the marginal cost at an output of 3 is $4,000.