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Question

The supply curve of Vidya can be represented by the equation p=0.01q3, p12 . The marginal cost of producing the 1500th unit for Vidya is Rs ___

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Solution

Supply curve starts from the minimum point of the SAC. This corresponds to a price of 12.
Substituting p=12 in the equation,
12=0.01q315=0.01qq=1500

Hence, the minimum point of SAC corresponds to an output level of 1500. Also, at the minimum point of SAC, SAC and MC curves intersect. Hence, the marginal cost of producing 1500th unit for Vidya is equal to the breakeven price of Rs 12.


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