est. 25 pts possible Suppose Susan is currently producing 10.000 pzzas per month

Question

est. 25 pts possible Suppose Susan is currently producing 10.000 pzzas per month at a total cost of $1,000 00 response using a real number rounded to two decimal places ) What is her a erage total cost of pro ucto n? S Enter a mere Now suppose Susan increases production to 10,001 pizzas, and the total cost of production increases to $1,000 17 What is her marginal cost of producing the 10001n pizza? S Since the marginal cost of product isgreater than the average total cost of production, the average total cost o, produetion must be

Explanation / Answer

1) Suppose Susan is currently producing 10,000 pizza per month at a total cost of $1,000.00. What is her average total cost of production?

Solution: $0.10

Working: 1000/ 10,000 = 0.10

2) Now suppose Susan increases production to 10,001 pizzas, and the total cost of production increase to $1,000.17. What is her marginal cost of producing 10,001st pizza?

Solution: $0.17

Working: $1,000.17 - $1,000.00 = $0.17

3) Since the marginal cost of production is greater than the average total cost of production, the average total cost of production must be rising

Explanation: Because average total cost of production exceeds marginal cost of production thus must be rising

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