Suppose you have a production technology that can be characterized by a learning curve. Every time you increase production by one unit, your marginal cost decreases by $4. There are no fixed costs, and the first unit costs you $66 to produce. Use the given information to fill in the marginal cost of each unit, as well as the total cost and average cost of each level of output. Quantity Marginal Cost Total Cost Average Cost ($/unit) (Units) ($) ($) $66 H~3456 $66 2 $66 $62.00 $128.00 $64.00 $58.00 $186.00 $62.00 $54.00 $240.00 $60.00 $50.00 $290.00 $58.00 $46.00 $336.00 $56.00 Suppose you receive a request for proposal (RFP) on a project for three units. Your break-even price for three units is $64.00 Suppose that if you get the contract, you estimate that you can win another project for two more units. The break-even price for those next two units alone is $56.00 *
Suppose you have a production technology that can be characterized by a learning curve. Every time you increase production by one unit, your marginal cost decreases by $4. There are no fixed costs, and the first unit costs you $66 to produce. Use the given information to fill in the marginal cost of each unit, as well as the total cost and average cost of each level of output. Quantity Marginal Cost Total Cost Average Cost ($/unit) (Units) ($) ($) $66 H~3456 $66 2 $66 $62.00 $128.00 $64.00 $58.00 $186.00 $62.00 $54.00 $240.00 $60.00 $50.00 $290.00 $58.00 $46.00 $336.00 $56.00 Suppose you receive a request for proposal (RFP) on a project for three units. Your break-even price for three units is $64.00 Suppose that if you get the contract, you estimate that you can win another project for two more units. The break-even price for those next two units alone is $56.00 *
Managerial Economics: A Problem Solving Approach
5th Edition
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Chapter4: Extent (how Much) Decisions
Section: Chapter Questions
Problem 3MC
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A10
Transcribed Image Text:Suppose you have a production technology that can be characterized by a learning curve. Every time you increase production by one unit, your
marginal cost decreases by $4. There are no fixed costs, and the first unit costs you $66 to produce.
Use the given information to fill in the marginal cost of each unit, as well as the total cost and average cost of each level of output.
Marginal Cost
Total Cost
Quantity
(Units)
Average Cost
($/unit)
($)
($)
1
$66
$66
2
$62.00
$128.00
$64.00
3
$58.00
$186.00
$62.00
4
$54.00
$240.00
$60.00
5
$50.00
$290.00
$58.00
6
$46.00
$336.00
$56.00
Suppose you receive a request for proposal (RFP) on a project for three units.
Your break-even price for three units is
$64.00
Suppose that if you get the contract, you estimate that you can win another project for two more units.
The break-even price for those next two units alone is
$56.00
$66
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