Answer:
No, offer is lower than production cost.
Explanation:
According to the data provided, the current cost of production is $300 per unit for 600 players. Therefore, current costs can be defined as:
[tex]C_1 = \$300*600\\C_1 = \$180,000[/tex]
Adding one unit, cost of production is $301 per unit for 601 players. The total costs are:
[tex]C_2 = \$301*601\\C_2 = \$180,901[/tex]
The marginal cost to produce the extra unit is:
[tex]MC = C_2-C_1 =\$180,901-\$180,000=\$901[/tex]
Since the value offered ($550) is less than the cost to produce the unit ($901), you should not accept the offer.
Average total cost is referred to as the total of all the production costs incurred by the company to the total output produced by the company. It is the combined set of all the costs whether be fixed or variable which is then to be divided by the number of units that are to be produced by the firm.
The answer is No, the offer is lower than the production cost.
The reason is :
According to the data:
The current cost of production =$300 per unit for 600 players.
Therefore, current costs can be defined as:
[tex]C1=\$300\times600\\C1=\$1,80,000[/tex]
Adding one unit, the cost of production is $301 per unit for 601 players. The total costs are:
[tex]C2= \$301\times601\\C2= \$1,80,901[/tex]
The marginal cost to produce the extra unit is:
[tex]MC= C2-C1=\$1,80,901-\$1,80,000=\$901[/tex]
Since the value offered ($550) is less than the cost to produce the unit ($901), you should not accept the offer.
To know more about the average total cost and the current level of production, refer to the link below:
https://brainly.com/question/15575298
