It costs a meat-processing company $50,000 to produce 5,000 pounds of steak. the company's cost will be $50,009 if it produces an additional pound of steak. if the company produces 5,001 pounds of steak then
Calculating average cost of steak initially when only 5000 pounds was produced Average cost= 50000/5000 AC= 10$ Now when 1 pound is added only 9$ is added in total cost so marginal cost MC= 9$ From above calculations we can see that AC>MC so we can say that the average cost of production is greater than marginal cost so it will be beneficial to produce more
