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3 May, 07:22

In order to produce 100 pairs of oven gloves, Marcia incurs an average total cost of $2.50 per pair. Marcia's marginal cost is constant at $10.00 for every pair of oven gloves produced. The total cost to produce 50 pairs of oven gloves is:

a. $250.00

b. $500.00

c. $300.00

d. $200.00

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Answers (1)
  1. 3 May, 09:16
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    option (d) $200.00

    Explanation:

    Average total cost for 100 pairs = $2.50

    Marginal cost for every pair = $10.00

    Now,

    Total cost = Fixed cost + Variable cost

    or

    Fixed cost = Total cost - variable cost

    or

    Fixed cost = (Average total cost * 100) - (Marginal cost * 100)

    = ($2.5 * 100) - ($1 * 100)

    = $250 - $100

    = $150

    thus,

    Total cost to produce 50 pairs of oven gloves

    = fixed cost + variable cost

    = $150 + (50 * $1)

    = $150 + $50

    = $200

    Hence,

    option (d) $200.00
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