Question

Assume that Product level P₁=62 and Product level P₂=109. If total costs are $681 at P₁ and $1.451 at P₂ , calculate the marginal cost of production of the units between P₁ and P₂ . Do not include the " $ " symbol in your answer; do not use commas. Make sure that your answer is accurate to the penny, In other words, it. should be accurate to two places to the right of the decimal place.

Answer 1

The marginal cost of production per unit between Production levels P1 and P2 is calculated by dividing the change in total cost ($16.38) by the change in quantity produced.

Step-by-step explanation:

The question asks us to calculate the marginal cost of production for the units produced between two different production levels, P1 and P2.

Marginal cost is defined as the additional cost of producing one more unit of output. To compute the marginal cost, we take the change in total cost and divide it by the change in quantity produced.

In this scenario:

• Total cost at P1 (62 units) = $681
• Total cost at P2 (109 units) = $1451
• Change in total cost = $1451 - $681 = $770
• Change in quantity produced = P2 - P1 = 109 - 62 = 47 units
• The marginal cost of production per unit is calculated as $ 770 / 47 units

Thus, the marginal cost per unit is:

$ 16.38