Question

The Taxpayer Assistance Center (TAC) provides taxpayer assistance to help in the preparation of individual tax returns. The amount of assistance (A) that can be             provided is a function of the number of professional accountants (P) and trained tax    preparers (T) that are employed. The function is given by:

                                  A = 500P +200T +50PT

(b) Calculate the marginal cost of providing additional assistance. Explain your answer.

Answer 1

This shows that when one units of both T and P increases, the marginal cost of assistance is increases by (700 + 50(1+1))= 800 units.