Question

A manufacturer of mountain bikes has found that when 20 bikes are produced per day, the average cost is $200 and the marginal cost is $150. Based on the information, approximate the total cost of producing 21 bikes per day. ...?

Answer 1

At 20 bikes, the average cost is $200. This means that each bike costs about $200 to make, thus the total cost for the first 20 bikes is $4000. 


The marginal cost represents the cost of producing one more unit. If the cost of producing a bike after the 20th one (in other words the 21st bike) is $150, then the total cost of producing all 21 bikes is $4150.