To determine whether your production is profitable or not, you should refer to both Average Cost (AC) and Marginal Cost (MC).

Here's why:

1. Average Cost (AC): This is the total cost divided by the number of goods produced. It represents the cost of producing one more unit of good. If your AC is less than the price per unit, you're making a profit.

2. Marginal Cost (MC): This is the cost of producing one additional unit of a good. If the MC is less than the price per unit, you're making a profit on each additional unit sold.

So, in your case, if both your AC and MC are less than $1,000, you're making a profit. If either is more than $1,000, you're not making a profit.

Remember, it's important to consider both costs because AC gives you an overall picture of your profitability, while MC helps you understand profitability on a per-unit basis.

Question

To determine whether your production is profitable or not, you should refer to both Average Cost (AC) and Marginal Cost (MC).

Here's why:

1. Average Cost (AC): This is the total cost divided by the number of goods produced. It represents the cost of producing one more unit of good. If your AC is less than the price per unit, you're making a profit.

2. Marginal Cost (MC): This is the cost of producing one additional unit of a good. If the MC is less than the price per unit, you're making a profit on each additional unit sold.

So, in your case, if both your AC and MC are less than $1,000, you're making a profit. If either is more than $1,000, you're not making a profit.

Remember, it's important to consider both costs because AC gives you an overall picture of your profitability, while MC helps you understand profitability on a per-unit basis.

Knowee AI · Accepted Answer

To determine whether your production is profitable or not, you should refer to both Average Cost (AC) and Marginal Cost (MC).

Here's why:

1. Average Cost (AC): This is the total cost divided by the number of goods produced. It represents the cost of producing one more unit of good. If your AC is less than the price per unit, you're making a profit.

2. Marginal Cost (MC): This is the cost of producing one additional unit of a good. If the MC is less than the price per unit, you're making a profit on each additional unit sold.

So, in your case, if both your AC and MC are less than $1,000, you're making a profit. If either is more than $1,000, you're not making a profit.

Remember, it's important to consider both costs because AC gives you an overall picture of your profitability, while MC helps you understand profitability on a per-unit basis.

produce 100 units of outputs (say, furniture). The priceof my product is $1,000. If I want to know whether myproduction is profitable or not, which cost, AC or MC,should I refer to?

Question

Solution

Similar Questions

Upgrade your grade with Knowee