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A firm’s average total cost is Rs. 300 at 5 Units of output and Rs.320 at 6 units of output. The marginal cost of producing the 6th unit is:
- a)Rs.20
- b)Rs.120
- c)Rs. 320
- d)Rs.420
Correct answer is option 'D'. Can you explain this answer?
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Verified Answer
A firm’s average total cost is Rs. 300 at 5 Units of output and ...
Total cost for producing 5 units = 300 * 5 = 1500
Total cost for producing 6 units = 320 * 6 = 1920
Therefore, Marginal cost for producting the 6th unit =
1920-1500 = 420
Most Upvoted Answer
A firm’s average total cost is Rs. 300 at 5 Units of output and ...
Given information:
- Average total cost at 5 units of output = Rs. 300
- Average total cost at 6 units of output = Rs. 320
Calculating Average Total Cost (ATC):
- Average total cost is calculated by dividing the total cost by the total output.
- The given information provides the average total cost at two different levels of output.
- Therefore, we can calculate the total cost at each level and then find the average total cost.
Calculating Total Cost:
- To calculate the total cost, we can multiply the average total cost by the total output.
- Average total cost at 5 units of output = Rs. 300
- Total cost at 5 units = Rs. 300 * 5 = Rs. 1500
- Average total cost at 6 units of output = Rs. 320
- Total cost at 6 units = Rs. 320 * 6 = Rs. 1920
Calculating Marginal Cost:
- Marginal cost is the additional cost incurred by producing one more unit of output.
- It can be calculated by finding the difference in total cost when the output increases by one unit.
- In this case, the marginal cost of producing the 6th unit can be calculated as follows:
- Marginal cost = Total cost at 6 units - Total cost at 5 units
- Marginal cost = Rs. 1920 - Rs. 1500 = Rs. 420
Therefore, the correct answer is option 'D' - Rs. 420.
- Average total cost at 5 units of output = Rs. 300
- Average total cost at 6 units of output = Rs. 320
Calculating Average Total Cost (ATC):
- Average total cost is calculated by dividing the total cost by the total output.
- The given information provides the average total cost at two different levels of output.
- Therefore, we can calculate the total cost at each level and then find the average total cost.
Calculating Total Cost:
- To calculate the total cost, we can multiply the average total cost by the total output.
- Average total cost at 5 units of output = Rs. 300
- Total cost at 5 units = Rs. 300 * 5 = Rs. 1500
- Average total cost at 6 units of output = Rs. 320
- Total cost at 6 units = Rs. 320 * 6 = Rs. 1920
Calculating Marginal Cost:
- Marginal cost is the additional cost incurred by producing one more unit of output.
- It can be calculated by finding the difference in total cost when the output increases by one unit.
- In this case, the marginal cost of producing the 6th unit can be calculated as follows:
- Marginal cost = Total cost at 6 units - Total cost at 5 units
- Marginal cost = Rs. 1920 - Rs. 1500 = Rs. 420
Therefore, the correct answer is option 'D' - Rs. 420.
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A firm’s average total cost is Rs. 300 at 5 Units of output and Rs.320 at 6 units of output. The marginal cost of producing the 6th unit is:a)Rs.20b)Rs.120c)Rs. 320d)Rs.420Correct answer is option 'D'. Can you explain this answer?
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