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The company "High Fidelity" can produce 40 high quality turntables per day at an average total cost of $100 per turntable
The company "High Fidelity" can produce 40 high quality turntables per day at an average total cost of $100 per turntable. The marginal cost function is
[Math Processing Error]MC(Q)=2.5⋅Q
1. What is the total cost to produce 40 high quality turntables per day?
A. $100
B. $400
C. $1000
D. $4000
2. At [Math Processing Error]Q=40, the Average Total Cost is
A. less than the average variable cost.
B. equal to the average variable cost.
C. greater than the average variable cost.
D. not comparable to the average variable cost.
Expert Solution
The answer is D).
Total cost is the product of average total cost and the quantity of output. For producing 40 turntables, the average total cost is $100, so the total cost is:
- 40 * 100 = $4,000
Marginal Cost:
Marginal cost is the cost of producing the last unit of output. When production function is continuous, marginal cost is the first order derivative of total cost with respect to quantity of output.
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