Question

It costs a company $30,000 to produce 600 heart rate monitors. The company’s cost will be $30,070 if it produces an additional heart rate monitor. The company is currently producing 600 heart rate monitors. The the minimum price that would induce this company to produce the 601st heart rate monitor is ________.

Answer 1

Answer: The the minimum price that would induce this company to produce the 601st heart rate monitor is $70.

Explanation: The marginal cost of producing one more unit is equal to 30070 - 30000 = 70.

A company produces to the point where the price is equal to the marginal cost. In other words, the cost of producing one more unit does not exceed the benefit to be obtained from the sale of one more unit.