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Average Cost

by aplavakarthik » Sun Sep 04, 2011 10:00 am
Each book was sold at the same selling price. Did the average production cost decrease with the
number of books produced?

(1) The production cost increased with the number of books produced, but the selling price
of each book remained constant at $24.5.

(2) The profit per unit from the sales of the books increased with the number of books
produced.

Ans B
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Source: — Data Sufficiency |
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by mukgera » Sun Sep 04, 2011 11:32 pm
aplavakarthik wrote:Each book was sold at the same selling price. Did the average production cost decrease with the
number of books produced?

(1) The production cost increased with the number of books produced, but the selling price
of each book remained constant at $24.5. : Insufficient : it don't talk about the Avg cost getting increased /decreased.

(2) The profit per unit from the sales of the books increased with the number of books
produced. : Insufficient : Profit = Total Sale - Total Cost. Increase/decrease of ptofit could not answer.

When we combine these two info together. 1st states total selling cost is constant and 2nd says that the total profit is increasing. So Total Sale value would be increasing. Means Avg Cost = Total Sale/Total Production. Since both are increasing we can't surely say whether the avg is increasing or not.

So my take E
Ans B
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