![]() Compute the change in the quantity of production.The following three simple steps can determine it: Marginal cost = $57,312, which means the marginal cost of increasing the output by one unit is $57,312.Such a spurt in demand resulted in an overall production cost increase to $39.53 billion to produce a total of 398,650 units in that year. The following year in FY2018, driven by positive market demand, the production increased substantially, requiring more raw materials and hiring more manpower. Marginal cost = $2, which means the marginal cost of increasing the output by one unit is $2Ī public limited automobile company manufactured 348,748 vehicles (including M&HCV, LCV, Utility, and Cars) during FY2017, incurring a total production cost of $36.67 billion.Now, let us assume when the quantity of production is increased from 1,000 units to 1,500 units, the total cost of production increases from $5,000 to $6,000. Let us consider a simple example where a company’s total production cost stood at $5,000 for the production of 1,000 units. Therefore, from the options given above, option d is the current answer.You can download this Marginal Cost Template here – Marginal Cost Template Q1. Which of the following statements is true of the relationship between the average cost functions in short run average costs?Īnswer: By the definition of the Average Total Cost (ATC), we know that Solved Question on Short Run Average Costs 1 that the MC curve cuts the ATC curve at its minimum or optimum point. Marginal cost is equal to the average cost when the marginal cost is minimum. ![]()
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