Marginal Cost Analysis at Facebook

• Values:

• Variable Cost per Unit: $10
• Fixed Costs: $1,000,000
• Current Production Level: 100,000 units
• Incremental Production Level: 20,000 units
• Requirements:

0. Calculate the marginal cost per unit for Facebook.
1. Determine the total cost of producing the additional 20,000 units.
2. Discuss how marginal cost analysis helps in short-term decision-making.
3. Recommend production levels to maximize profitability at Facebook.