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You produce water bottles. Currently you produce four water bottles at a total cost of $40.
a. What is your average total cost?
b. Suppose you could produce one more bottle at a marginal cost of $5. If you do produce that bottle, what will your average total cost be? Has your average total cost increased or decreased? Why?
c. Suppose instead that you could produce one more bottle at a marginal cost of $20. If you do produce that fifth bottle, what will your average total cost be? Has your average total cost increased or decreased? Why?
He will do so if he thinks he can get his money back in one year. He believes the probabilities of the various outcomes at the end of one year are as follows
What are instances of economic failure that have contributed to this cost escalation? What should we do about them?
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