Marginal cost is the addition to total cost by increasing production by one unit. This is the total cost at the output level of 20,000 divided by 20,000 units. Thus, this is the average total cost per unit at the level of 20,000 units. It is not the marginal cost.
Marginal cost is the addition to total cost by increasing production by one unit. This is the total cost at the output level of 25,000 divided by 25,000 units. Thus, this is the average total cost per unit at the level of 25,000 units. It is not the marginal cost.
The amount of increase in total cost at each level is $325,000. The amount of increase in output at each level (second and third levels) is 2,500 units. Therefore, in the short run, the marginal cost per unit is $325,000 divided by 2,500, which is $130.
This is the amount of increase in the total cost at each level of production divided by 12,500. The divisor should be the amount of increase in output at either the second or third output level.
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What is Harper's short-run marginal cost?
