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Question
Pablo owns a record store. His total costs are $1.2 million per year, his variable costs are $750,000, and his fixed costs are $450,000 per year. Last year, Pablo sold 1,200 records. If Pablo sells 1,250 records this year (50 more than last year) and his average total cost increases to $1.28 million, we know that the
a. average total cost of selling 1,250 records is $1,000.
b. average variable cost of selling records has decreased.
c. average fixed cost of selling records is unchanged.
d. marginal cost of those 50 records is $80,000.
e. marginal cost of those 50 records is $1.28 million.
Answer
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