Question

The xyz widget factory can produce 80 widgets in a day at a total cost of $8,000 and it can produce 100 widgets a day at a total cost of $10,000.

a.what are the company's daily fixed costs and marginal cost per widget?

Answer 1

Fixed cost per widget is $0 and marginal cost per widget is $100

Step-by-step explaination:

Given that xyz widget factory can produce 80 widgets in a day at a total cost of $8,000 and also it can produce 100 widgets a day at a total cost of $10,000.

Now, we have to find company's daily fixed costs and marginal cost per widget.

the points are (80, 80,000) & (100, 10,000)

the equation can be written as
`y-y'=(y_(2)-y_(1))/(x_(2)-x_(1)) (x-x')`

⇒
`y-8000=(10,000-8,000)/(100-80) x-80`

⇒
`y-8000=100x-8000`

⇒ y=100x + 0

& by comparing with
`y= (marginal\thinspace cost)x + (fixed\thinspace cost)`, we get

The company's daily fixed costs and marginal costs are $0 and $100 resp.

Answer 2

Fixed cost : The type of cost that will stay the same regardless how much products you created.
Cost per unit for 80 widgets : 8000/80 = $1,000
Cost per unit for 100 widgets: $10,000/100 = $1,000
In this case, the fixed cost is 0.

Marginal Cost
Change in Total Cost / Change in Quantity produce

= ($10,000 - $ 8,000) / (100 -20)

= $ 2,000/20

= $1,000