It costs a company $35,000 to produce 500 graphing calculators.The company's cost will be $35,080 if it produces an additional graphing calculator.If the company produces 501 graphing calculators then
A)its average cost is greater than its marginal cost.
B)its average cost and its marginal cost are equal.
C)its average cost is less than its marginal cost.
D)This cannot be determined from the information given.

Question

Quizplus · Accepted Answer

The average cost per calculator is $35,000/500 = $70. The marginal cost of producing one more calculator is $35,080 - $35,000 = $80. Since $80 (marginal cost) is greater than $70 (average cost), the average cost is less than the marginal cost.

It Costs a Company $35,000 to Produce 500 Graphing Calculators