About the marginal cost, New York & Co. is considering a

About the marginal cost

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Reference no: EM13859910

Marginal cost

New York & Co. is considering a limited edition denim jacket. Because it is so special, the first few will sell for a very high price, the next for less, and so on. A curve on a graph is used to estimate the price of each jacket. It says that jacket n will be priced at $1500 / n. So the first jacket will be $1500, the second $750, and the third $500.

a. The manufacturing equipment costs $7,000, but the marginal cost of each jacket (labor and material) is only $8. How many jackets should the company produce?

b. What if a less automated system is selected, so that the equipment costs $5000 and the marginal cost of a jacket is $10?

Reference no: EM13859910

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