   Chapter 13.3, Problem 3QQ

Chapter
Section
Textbook Problem

Suppose Honda's total cost of producing 4 cars is $225,000 and its total cost of producing 5 cars is$250,000. What is the average total cost of producing 5 cars? What is the marginal cost of the fifth car? • Draw the marginal-cost curve and the average-total-cost curve for a typical firm, and explain why these curves cross where they do.

To determine
Marginal cost for a fifth car.

Explanation

If Honda’s total cost of producing 5 cars is $250,000, then the average total cost of production can be calculated as follows: Average total cost=(Total costQuantity)=(250,0005)=50,000 Thus, the value of average total cost is$56,250.

Honda increases its production from 4 to 5 and its total cost increases from 225,000 to 250,000. The marginal cost can be calculated as follows:

Marginal cost=(Total costOldTotal costNewQuantit

Still sussing out bartleby?

Check out a sample textbook solution.

See a sample solution

The Solution to Your Study Problems

Bartleby provides explanations to thousands of textbook problems written by our experts, many with advanced degrees!

Get Started

How can report writers decide what type of graphic to use in a report?

Essentials of Business Communication (MindTap Course List)

Describe the major components of a TQM program.

Foundations of Business (MindTap Course List)

LOAN AMORTIZATION Jan sold her house on December 31 and took a 10,000 mortgage as part of the payment. The 10-y...

Fundamentals of Financial Management, Concise Edition (with Thomson ONE - Business School Edition, 1 term (6 months) Printed Access Card) (MindTap Course List) 