Costs in the Short Run

Read this section about how to calculate costs in the short-run like variable and marginal costs. Make sure to answer the "Try It" questions.

Average and Marginal Costs

Answer to Try It Questions

First Question:

  • $3 per unit
    Correct. $135 is the total cost for 45 units = $45 + $90 - $135. The average total cost or cost per unit = $135/45 units = $3 per unit.

  • $10 per unit
    Incorrect. $135 is the total cost for 45 units = $45 + $90 - $135. The average total cost or cost per unit = $135 / 45 units = $3 per unit

  • $135
    Incorrect. $135 is the total cost for 45 units = $45 + $90 - $135. The average total cost or cost per unit = $135 / 45 units = $3 per unit

Second Question:

  • $18
    Incorrect. $18 is the total cost of producing 3 units, the marginal cost of the 4th unit is the change in total cost ($32 - 18) = $14

  • $14
    Correct. The cost of producing one additional unit is the change in total cost ($32 - 18) = $14

  • $32
    Incorrect. $32 is the total cost of producing 4 units, the marginal cost of the 4th unit is the change in total cost ($32 - 18) = $14