Question

Boeing produces commercial airliners. Assume that if Boeing produces 10 planes a year, its total costs are $500 million and that if produces 11 planes, its total costs are $560 million. The marginal cost of the 11th plane is $1 million. $60 million. $560 million. $1,060 million. $50.91 million.

Answer 1

The marginal cost of the 11th plane is $60 million.

Step-by-step explanation:

Marginal cost refers to the cost of producing one more unit of output.

In this case, every unit of output is an airplane. It costs Boeing $500 million to produce 10 airplanes, and $560 million to produce 11 airplanes. SO the marginal cost of the eleventh airplane = cost of producing 11 airplanes - cost of producing 10 airplanes = $560 million - $500 million = $60 million