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Calculating marginal cost of production

The Copy Center specializes in high-volume printing and color copying for small businesses. This is a fiercely competitive market. The following relation exists between output and total production costs:

Total Output Total Cost
0 $ 500
10,000 3,500
20,000 7,500
30,000 12,500
40,000 18,500
50,000 25,500
60,000 33,500
70,000 45,000

A. Construct a table showing the marginal cost of production.
B. What is the minimum price necessary for the company to supply ten thousand copies?
C. How many copies would the company supply at industry prices of $5,500 and $7,000 per ten thousand?

Solution Preview

Please refer attached file for better clarity of table.

A. Construct a table showing the marginal cost of production.

Total output, Q Total Cost, TC Marginal Cost,MC*
0 500
10000 3500 0.300
20000 7500 0.400
30000 12500 0.500
40000 18500 0.600
50000 25500 0.700
60000 ...

Solution Summary

Solution depicts the methodology to calculate marginal cost of production. It also calculates number of copies that will be supplied by the company at given market prices.

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