Calculating marginal cost
So far we have analysed the relationship between average cost and marginal cost. This activity will check that you can calculate marginal cost.
Imagine we have a firm producing nine units of output per day at a total cost of £11 250. It increases production to ten units per day at a total cost of £14 000.
(a) Calculate the average cost when ten units are produced per day.
(b) Calculate the marginal cost of increasing production to ten units per day.