Week 2 Assignment.docx - Week 2 Assignment Chapter 4 o Problem 4-2 a According to Froeb(2016"Marginal cost is the additional cost incurred by producing

Week 2 Assignment.docx - Week 2 Assignment Chapter 4 o...

This preview shows page 1 - 2 out of 4 pages.

Week 2 Assignment Chapter 4 o Problem 4-2 a) According to Froeb, (2016), "Marginal cost is the additional cost incurred by producing and selling one more unit." (p. 41). To calculate the marginal cost based on the problem, we need the difference(change) in costs divided by the difference in change of customers. Based on the table below, the marginal cost of loading for a second customer is $2. Customers Total Cost Marginal Cost Total Revenue Marginal Revenue Profit 1 $30 0 $10 0 10 - 30 = -$20 2 $32 (32-30)/(2-1) = 2 $20 (20-10)/(2-1) = $10 20 - 32 = -$12 3 $35 (35-32)/(3-2) = 3 $30 (30-20)/(3-2) = $10 30 - 35 = -$5 4 $38 (38-35)/(4-3) = 3 $40 (40-30)/(4-3) = $10 40 - 38 = -$2 5 $42 (42-38)/(5-4) = 4 $50 (50-40)/(5-4) = $10 50 - 42 = $8 6 $48 (48-42)/(6-5) = 6 $60 (60-50)/(6-5) = $10 60 - 48 = $12 7 $57 (57-48)/(7-6) = 9 $70 (70-60)/(7-6) = $10 70 - 57 = -$13 8 $68 (68-57)/(8-7) = 11 $80 (80-70)/(8-7) = $10 68 - 80 = -$12 b) Price is equal to marginal revenue in a perfectly competitive market. If the price of service is $10 per ride, you choose the customer load where the marginal cost equals to the price or marginal cost closest to price but less than the price. You will not prefer to provide service if marginal cost is greater than the price since additional customers cost more than it brings in. Products are maximized if seven customers are provided o Problem 4-6
Image of page 1

Subscribe to view the full document.

Image of page 2
  • Fall '13

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern

Ask Expert Tutors You can ask 0 bonus questions You can ask 0 questions (0 expire soon) You can ask 0 questions (will expire )
Answers in as fast as 15 minutes