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1. A firm produces 200 units and total cost of production is $4000. When they increase output to 220, the cost rises to $4 200. What is the marginal cost?

1. A firm produces 200 units and total cost of production is $4000. When they increase output to 220, the cost rises to $4 200. What is the marginal cost?

Essentials of Economics (MindTap Course List)
Essentials of Economics (MindTap Course List)
8th Edition
ISBN:9781337091992
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter12: The Cost Of Production
Section: Chapter Questions
Problem 3CQQ
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SECTION C: EXTENDED PERFORMANCE 1. A firm produces 200 units and total cost of production is $4000. When they increase output to 220, the cost rises to $4 200. What is the marginal cost? 2. A firm produces 200 units and total cost of production is $4000. When they increase output to 220, the cost rises to $4 200. What is the average cost of producing 220 units? 3. The Caribbean airline is making reasonable profit and wants to expand its operation to include a destination in Canada. The following data represents its costs per flight: 24 58 800 Fuel costs Depreciation Insurance Interest Labour 3 000 12 000 16 000 20 000 Landing charges Other fixed costs 2 000 13 400 (a) State which of the costs are fixed and which are variable in the short run. Fixed Costs Variable Cost (b) If the maximum number of passengers per flight is 400, what is the minimum price per seat that the airline must charge to operate in the short run?
Transcribed Image Text:SECTION C: EXTENDED PERFORMANCE 1. A firm produces 200 units and total cost of production is $4000. When they increase output to 220, the cost rises to $4 200. What is the marginal cost? 2. A firm produces 200 units and total cost of production is $4000. When they increase output to 220, the cost rises to $4 200. What is the average cost of producing 220 units? 3. The Caribbean airline is making reasonable profit and wants to expand its operation to include a destination in Canada. The following data represents its costs per flight: 24 58 800 Fuel costs Depreciation Insurance Interest Labour 3 000 12 000 16 000 20 000 Landing charges Other fixed costs 2 000 13 400 (a) State which of the costs are fixed and which are variable in the short run. Fixed Costs Variable Cost (b) If the maximum number of passengers per flight is 400, what is the minimum price per seat that the airline must charge to operate in the short run?
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