Homework Answers
3.
The total cost of 5 unit of output=$ 95
(a) If 6th output is produced, the total cost increases to $117.88,
Marginal cost of 6th unit of output= TC of 6 unit - TC of 5 unit
=$117.88-$95
=$22.88
(b)
Average total cost of producing 5 unit of output= TC/Q
=95/5
=$19
(c)
Average total cost of producing 6 unit of output= TC/Q
=117.88/6
=$19.65
(d)
The average cost is increasing because the marginal cost of 6th unit of output more than the average of 5 unit of output. So when the average cost of 6 unit of output is calculated the marginal cost of 6th unit of output is also included in the total cost.
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