How do you construct a table showing the marginal cost of paper cup productions?
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Price/Output Determination
Cold Case, Inc., produces beverage containers used by fast food franchises. This is a perfectly competitive market. The following relation exists between the firm's beverage container output per hour and total production costs:
Total Total
Output Cost
0 $ 35
1,000 85
2,000 145
3,000 215
4,000 295
5,000 385
6,000 485
7,000 610
A. Construct a table showing the marginal cost of paper cup productions.
B. What is the minimum price necessary for the company to supply one thousand cups?
C. How many cups would the company supply at industry prices of $75 and $100 per thousand?
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Solution Summary
This solution constructs a table showing the marginal cost of production, minimum price for a certain level of production and supply at certain price levels.
Solution Preview
A firm will maximize profits (or minimize losses) by producing at that point where marginal cost equals marginal revenue (for continuous production points). If there are discrete production points (the current ...
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