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If total cost is 25 when no units are produced and total cost is 75 when 3 units are
produced, we can say that…
marginal cost of unit 3 is 75 .
fixed cost is 25 .
variable cost of unit 3 is 25
average cost of unit 3 is 75 .

Ask by Huang Ortega. in the United States
Mar 24,2025

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Fixed cost is 25.

Solución

We are given that when no units are produced, the total cost is . This cost when no production occurs is known as the fixed cost. When 3 units are produced, the total cost is .
Step 1: Identify the fixed cost
Since no units are produced, the cost remains at its intrinsic level, meaning the fixed cost is
Step 2: Interpret the remaining cost when production occurs
When 3 units are produced, the total cost is . The variable cost is the change in total cost minus the fixed cost:
However, the fixed cost does not change with production.
Thus, the correct statement is:

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The Deep Dive

The fixed cost is indeed 25, as this is the cost incurred when no units are produced. It remains constant regardless of production level. Therefore, when three units are produced, the total cost of 75 minus the fixed cost of 25 gives us a variable cost of 50 for those three units.
Now, the marginal cost of producing each additional unit can be calculated based on the change in total cost. The marginal cost of the third unit specifically is derived from the cost of producing three units versus two units. So, while the average cost may sound appealing at 75, it’s the marginal cost that gives you the insight into your expenses per additional unit produced.

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