5

Acme Home Builders, Inc., has built 24 houses so far this year at a total cost to the company of $4.80 million. If the company builds a 25th house, its total cost will increase to $5.05 million. Which of the following statements is correct?

a. The company should never build the 25th house because this increases its total cost.

b. The marginal cost of the 25th house, if it is built, will equal $250,000.

c. For the first 24 houses, the average cost per house was $205,000.

d. If the company can sell the 25th house for at least $202,000, then it should build it.