It costs a company $35,000 to produce 500 graphing calculators

• The correct answer is c) Its average cost is less than its marginal cost.

First of all, we need to compute the average total cost (ATC) and then compare it to the marginal cost (MC). You can find below the equation.

Average Total Cost=Total Cost of ProductionNumber of Units ProducedAverage Total Cost=Total Cost of ProductionNumber of Units Produced

We can proceed to calculate the average total cost of this firm.

Average Total Cost=$35,000500=$70Average Total Cost=$35,000500=$70

The marginal cost can be described as the extra cost that a firm has when it produces an extra unit of a product. Based on this, the marginal cost is $80 since the costs increased from $35,000 to $35,080 when an extra unit was produced.

Therefore, the ATC is less than the MC ($70<$80). The correct answer is option c).

In contrast, options a) and b) are incorrect because the average cost is not greater nor equal than the marginal cost. Option d) is also incorrect because we have enough information to solve the problem.

Cost:

The term known as cost, in economics, is the money that a company must pay in order to purchase the inputs that are necessary to manufacture a good. It is very important to take into consideration the costs associated with production with the goal of determining the optimal price.