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Economics and the 2008 crisis: a Keynesian view
Economics and the 2008 crisis: a Keynesian view

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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.

Activity 25

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.

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(b) Calculate the marginal cost of increasing production to ten units per day.

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