One of your firms suppliers discounts prices for larger quan

One of your firm’s suppliers discounts prices for larger quantities. The first 1,000 parts are $13 each. The next 2,000 are $12 each. All parts in excess of 3,000 are $11 each. What are the average cost and marginal cost per part for the following quantities?

Solution

Average and marginal cost of 1000 quantities=13

Then total cost for 3000 quantities=13000+24000=37000

Thus average cost=37000/3000=12.33 and marginal cost=12

And all quantities exceeding 3000

Say total quantities=X>3000

Then total cost=37000+11(X-3000)

Thus avg cost={37000+11(X-3000)}/X

And marginal cost=11 per unit