Worksheet – Unit 4

MegAcme Corp.

Quantity

Cost:    Type  A

Cost:    Type B

Total Costs – both types

Marginal Cost (MC)

Price

Total Revenue

Marginal Revenue (MR)

0

$10

$0

 n.a.

$21

n.a.

1

$10

$20

$21

$21

2

$10

$38

$21

$21

3

$10

$54

$21

$21

4

$10

$72

$21

$21

5

$10

$92

$21

$21

6

$10

$114

$21

$21

7

$10

$138

$21

$21

Directions:   The above table shows the costs and revenue potential for different possible levels or quantities of production.  Let us assume that whatever quantity produced can and will be sold.  You need to first fill in the missing columns.

Keep in mind these relationships:

  • Total costs is the sum of all types of costs
  • Total revenue is quantity times price
  • “Marginal” is the increase in the total value when the quantity was increased by one.  So, for example, Marginal Revenue is the increase in total revenue when quantity rises by one. Since each line represents an increase in quantity of one, then in this table marginal amounts can be figured by looking at how much the total amount increased from the previous line.

It may help to print out this page and enter your answers on the printed page.  You will need to refer to these values when you answer the questions about this worksheet in your school’s learning management system. (Moodlerooms at HFCC).  

5 thoughts on “Worksheet – Unit 4

  1. Fadi Zarka

    I’m having trouble comprehending this info. I could use better instructions on how to calculate MArginal Cost and Total Revenue

    Reply
  2. Hoda Alhassan

    Marginal cost is easy. All you need to do is add cost A and cost B together for the TOTAL COST first, so on the chart, when 1 quantity is demanded, cost A $10 + cost B $20= $30. $30 dollars is the TC( total cost) when only 1 quantity is demanded. Now to figure out marginal cost, you also need to figure out the TC of the 0 quantity. So cost A $10+ cost B $0 is $10 dollars(TC) when the quantity is 0. This was all the total cost which is pretty simple, all you are doing is adding all of them first.

    NOW, for marginal cost, you are subtracting the total cost for quantity 1 ($30 subtracted by $10) quantity 0 which brings you to $20.The marginal cost for 1 quantity demanded is $20. We will never have a marginal cost for 0 quantity demanded, that is why there is an n.a. for no answer.

    Lets try the marginal cost for 2 quantities demanded, we know the TC is $48 by added both the costs together, so now we subtract the TC (total cost in case you forgot) of quantity 2, $48 subtracted by quantity 1, $ 30, which gives you $18 and that is your marginal cost.

    Total revenue is just the quantity produced multiplied by the price. Now as it states on the chart, we should all know the price is $21 and all you need to do is multiply it to how much quantity you have.

    I hope I made this understanding, please correct me if I am wrong anyone.

    Reply
  3. Salena Murdock

    @Fadi Zarka
    Under the chart theres a *Remember reminder*

    To calculate the —Total costs is the sum of all types of costs (Add cost 1 and 2 together)
    To calculate the —Total revenue is quantity times price (Take the total revenue and multiply it with the price)

    Reply
  4. Ali Shaban

    I was having trouble with figuring out the marginal cost as well. I looked it up though its much easier than the formulas I was trying.
    Step 1: Divide total cost by total quantity.
    Step 2: subtract quantity of the unit your want to find the MC for by the quantity directly above it.
    EX: if you were looking at 6 units, you would minus 6 by 5 units.
    Step 3: Subtract the total cost of the unit by the total cost of the unit above it same way you did for step 2
    subtract quantity of the unit your want to find the MC for by the quantity directly above it.
    Step 4 divide the answer from step 3 by the answer from 2
    hope this helps

    Reply

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