Egt1 Task 309.1.1-05 06
B: Marginal cost is the variation in the total cost of production as a result of the production of one more or one less unit. Marginal cost is important in figuring out whether or not to vary the production rate. Typically, marginal cost decreases as the output increases due to factors such as the cost of bulk rate materials, the efficient use of the existing equipment and labor specializations of the employees. A sale at a price higher than the average marginal cost will result in the company making more profit even though the price doesn’t cover the average total unit cost. Marginal cost can be seen as the lowest amount at which a sale can be made without subtracting from the profits of a company. Marginal Cost = Total Cost divided by Quantity or (Marginal Cost)
C: Profit is the return on investment after the cost of production and all other business charges. For example, if a company spends $80,000 in the production of a product and the total sales...
Cited: Marginal Cost. (n.d.). Retrieved 12 14, 2011, from Wikipedia: http://en.wikipedia.org/wiki/Marginal_cost
Marginal Revenue. (n.d.). Retrieved 12 14, 2011, from Wikipedia: http://en.wikipedia.org/wiki/Marginal_revenue
Marginal Revenue. (n.d.). Retrieved 12 15, 2011, from AmosWeb Encyclonomic: http://www.amosweb.com/cgi-bin/awb_nav.pl?s=wpd&c=dsp&k=marginal+revenue
Profit Maximization. (n.d.). Retrieved December 12, 2011, from Wikipedia: http://en.wikipedia.org/wiki/Profit_maximization
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