Question

The owner of a pizza-by-the-slice shop has determined the marginal cost for his company is $1.50. His daily fixed costs are $125. What is the total cost to sell 300 slices in one day?

Answer 1

Answer:

$300\cdot \ 1.50+\ 125=\ 450+\ 125=\ 575$

Step-by-step explanation:

The marginal cost is said to be $1.50. Marginal cost is just how much the cost increases per additional unit produced. In this case we're dealing with a shop of slices of pizza, so the marginal cost just represents how much the cost increases per additional slice of pizza produced, or in simpler words, how much it costs to produce a slice of pizza.

We want to compute the total cost to sell 300 slices in one day, so we have to compute how much it costs to produce those 300 slices and add up the fixed costs (which is $125, no matter how many slices we produce). Since the marginal cost is $1.50, that means each slice costs $1.50 to produce. So the 300 slices cost $300\cdot \ 1.50=\ 450$ to produce. And so the total cost is

$\ 450+\ 125=\ 575$