Marginal cost problem: A manufacturer of mountain bikes has found...

[naveed_786110]

'A manufacturer of mountain bikes has found that when 20 bikes are produced per day, the average cost is rs. 150 and the marginal cost is rs. 125. based on that information, approximate the total cost of producing 21 bikes per day'

SOLUTION;

If the average cost is 150 per 20 bikes, the total cost for 20 bikes is: 150 * 20=3000 Then you have to add another bike, which has a marginal cost of 150so it's 3000 + 150 = 3150

IS THIS SOLUTION CORRECT? .... WHAT IF I QUESTION IS LIKE THAT.....'A manufacturer of mountain bikes has found that when 20 bikes are produced per day, the average cost is rs. 150 and the marginal cost is rs. 125. based on that information, approximate the total cost of producing 27 bikes per day'...Should it be solved in a same way?

 

[Ishuda]

'A manufacturer of mountain bikes has found that when 20 bikes are produced per day, the average cost is rs. 150 and the marginal cost is rs. 125. based on that information, approximate the total cost of producing 21 bikes per day'

SOLUTION;

If the average cost is 200 per 20 bikes, the total cost for 20 bikes is: 200 * 20Then you have to add another bike, which has a marginal cost of 150so it's 200 * 20 + 150 = 4150

IS THIS SOLUTION CORRECT? .... WHAT IF I QUESTION IS LIKE THAT.....'A manufacturer of mountain bikes has found that when 20 bikes are produced per day, the average cost is rs. 150 and the marginal cost is rs. 125. based on that information, approximate the total cost of producing 27 bikes per day'...Should it be solved in a same way?

Actually, one might question your solution. Initially you say the marginal cost is rs. 125 but the solution says the marginal cost is rs. 150. So, which is it?

But, to answer your question, yes, you would treat the total cost of producing 27 bikes per day the same way [but make sure you get the correct marginal cost]