Question

In the short​ run, a​ firm's total costs of producing the hundredth unit of output equal ​$9,000. If it produces one more​ unit, its total costs will increase to ​$9,200.(a) What is the marginal cost of the 101st unit of output?(b) What is the firm’s average total cost of producing a 100 units?(c) What is the firm’s average total cost of producing 101 units

Answer 1

a. Marginal cost of producing the 101 unit

= Change in total cost

Change in output

= $9,200 - $9,000

101 units - 100 units

= $200

b. The firm's average total cost of producing 100 units

= $9,000

100 units

= $90

c. The firm's average total cost of producing 101 units

= $9,200

101 units

= $91.09

Step-by-step explanation:

The marginal cost of producing 101 units is an extra cost of producing an additional unit. It is calculated as change in cost divided by change in output. Change in cost is $200 while change in output is 1 unit. The division of change in cost by change in output gives the marginal cost of producing 101 units.

The average total cost of producing 100 units is the division of total cost of producing 100 units by the quantity of output (100 units).

The average total cost of producing 101 units is obtained by dividing the total cost of producing 101 units by the quantity of output (101 units)