117k views
1 vote
Suppose you have two types of customers. Type 1 customers typically purchases your firm's product in bundles of 100 units, while type 2 customers typically purchase less than 10 units. The cost of producing one unit is $1 plus packaging costs. Packaging costs $1 per unit for small orders, but only $10 for a bundle of 100 units. Finally, suppose type 1 buyers have a price elasticity of demand equal to -2, while type 2 buyers have an elasticity equal to -1.25. a. What is the marginal cost of selling 100 units to a Type 1 buyer

User Diroallu
by
7.9k points

1 Answer

5 votes

Answer:

The marginal cost of selling 100 units to a Type 1 buyer is $110

Step-by-step explanation:

In order to calculate the marginal cost of selling 100 units to a Type 1 buyer we would have to use the following formula:

Marginal Cost of selling 100 units to type 1 buyer=MC1= Marginal Cost of producing 100 units+Packaging cost

Therefore, Marginal Cost of selling 100 units to type 1 buyer=MC1

=1*100+10=$110

The marginal cost of selling 100 units to a Type 1 buyer is $110

User Nzc
by
8.0k points

No related questions found

Welcome to QAmmunity.org, where you can ask questions and receive answers from other members of our community.

9.4m questions

12.2m answers

Categories