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18 November, 10:13

You rent a car for $29.95. The first 150 miles are free, but each mile thereafter costs 15 cents. You plan to drive it 200 miles. What is the marginal cost of driving the car beyond the first 150 free miles?

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  1. 18 November, 10:40
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    marginal cost is 15 cents

    Explanation:

    given data

    car rent = $29.95

    distance d1 = 150 miles

    cost = 15 cents per miles

    distance d2 = 200 miles

    to find out

    marginal cost

    solution

    first we find here cost for driving d2

    cost for 150 to 200 miles = 15 * 50

    cost for 150 to 200 miles = 750 cents = $7.5

    so

    cost for driving d2 = $7.5 + $29.95

    cost for driving d2 = $37.45

    so

    marginal cost will be

    marginal cost = change in cost / chance in distance

    marginal cost = 37.45 - 39.95 / (200-150)

    marginal cost = 7.5 / 50 = 0.15

    marginal cost is 15 cents
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