Question

Marginal cost calculation !

Jane needed furniture for her apartment so she went to IKEA. After picking out what she needed, her total added up to 2,200 dollars. There is a 100 dollar delivery fee if she spends less than 2,500 dollars.

What would be the marginal cost to jane if she added a dresser priced for 600 dollars to her order?

Economics- Marginal Cost - Help

Answer 1

Total amount of the products she initially picked = $2,200.

Now, since this amount is less than $2,500, she will be charged a delivery fee of $100.

So, the total amount to be paid by her will be $2,300.

Now, if she adds a product worth $600.

She will produce a total of $(2,200 + 600) = $2,800 worth of products.

Now, since that exceeds $2,500, she will not be charged $100 delivery fee and the total amount to be paid by her will be $2,800.

The marginal cost for this problem will be $(2,800 - 2,300) = $500.