43.8k views
4 votes
If the 15th unit of output has a marginal cost of $29.50 and the average cost of producing 14 units of output is $30.23, what will happen to the average cost of production if the 15th unit is produced?

User Janusz
by
6.3k points

1 Answer

5 votes

Answer:

The average cost of production will fall by $0.05 per unit, from $30.23 to $30.18

Step-by-step explanation:

The marginal cost is the cost of producing an additional unit.

The marginal cost of 15th unit is $29.5 which means it will cost $29.5 to produce the 15th unit.

If the average cost per unit for the 14 units is 30.23, then total cost of producing these 14 units will b, 30.23 * 14 = $423.22

The total cost of producing 15 units will b, 423.22 + 29.5 = $452.72

The new average cost at production of 15 units is, 452.72 / 15 = $30.18

Thus, as a result of adding the 15th unit, the average cost per unit fell by $0.05 from $30.23 to $30.18

User Ozgur Oz
by
5.2k points