Pablo owns a record store.His total costs are $1.2 million per year,his variable costs are $750,000,and his fixed costs are $450,000 per year.Last year,Pablo sold 1,200 records.If Pablo sells 1,250 records this year (50 more than last year)and his average total cost increases to $1.28 million,we know that the

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Quizplus · Accepted Answer

The marginal cost is the additional cost incurred to produce one more unit. Here, Pablo is selling 50 more records this year than last year, which means the marginal cost is the additional cost to produce those 50 records. We are given that the increase in total cost from last year to this year is $80,000 ($1.28 million - $1.2 million). Therefore, the marginal cost of those 50 records is $80,000.

Pablo Owns a Record Store