ABC Ltd. is considering increasing the production level. What is the approximate marginal cost of increasing production from its July level of 40 units?
Explanation:
Total cost for 41 units = 800 + 1200 + 3700 = 5700
Total cost for 51 units = 800 + 1200 + 5000 = 7000
∴ Total cost for 10 units = 7000 − 5700 = 1300
∴ Cost per unit = Marginal Cost = Rs. 130
Hence, option (b).
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