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Question

A firm's average total cost is Rs$$300$$ at $$5$$ units of output and Rs$$320$$ at $$6$$ units of output. The marginal cost of producing the $$6$$th unit is ______.


A
Rs20
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B
Rs120
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C
Rs320
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D
Rs420
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Solution

The correct option is D Rs$$420$$
$$TC=AC\times Q$$
So we have;
$$300\times 5=1500$$
$$320\times 6=1920$$  
Thus, $$MC= {TC}_n - {TC}_(n-1)$$
$$MC= 1920-1500=420$$
Thus, Marginal cost of producing $$6th$$ unit is $$Rs.420$$.

Mathematics

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