Question
You are the CFO of a firm that, when it produces 200 units, has an ATC of $100. You sell each unit for 250 dollars.
You are the CFO of a firm that, when it produces 200 units, has an ATC of $100. You sell each unit for 250 dollars. The CEO suggests expanding production to 201 units because according to his/her analysis, ATC will only increase to $101, which is still much lower than the selling price of $250. a) How much is the marginal cost of the 201 unit? Show work. b)What would you advise to the CEO about expanding production to the 201" unit? (Use only the info given and think about profits).
Step by Step Solution
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Step: 1
To find the marginal cost of the 201st unit we need to understand that ...
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Business Law The Ethical Global and E-Commerce Environment
Authors: Jane Mallor, James Barnes, Thomas Bowers, Arlen Langvardt
15th edition
978-0073524986, 73524980, 978-0071317658
