Lux Autocorp is a company specialized in the production of luxury vehicles. Let’s assume its total...
Lux Autocorp is a company specialized in the production of luxury vehicles. Let’s assume its total cost of producing 4 cars is $450,000 and its total cost of producing 5 cars is $500,000. a) What is the average total cost of producing 4 cars? b) What is the marginal cost of the fifth car?
Homework Answers
A.
Average cost of producing 4 cars
=total cost / quantity
=4,50,000/4
=1,12,500.
B.
Marginal cost= change in total cost / change in quantity
=(5,00,000-4,50,000)/(5-4)
=50,000/1
=50,000.
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