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Top 10 facts about the world. Marginal cost and total cost are related in terms of the cost of production for manufacturing companies or service providers. Fixed costs and marginal variation in cost are both considered when determining the total cost, so total costs encompass marginal costs. The average total cost will generally decrease to a minimum before increasing, forming a U-shape.
So we must find out if marginal cost is greater than or less than $300. To do this, calculate total cost for 200 doses and 201 doses, and calculate the increase in total cost. Multiplying quantity by average total cost, we find that total cost rises from $40,000 to $40,401, so marginal cost is $401.ince Bobâs average total cost is $280/10 = $28, which is greater than the price, he will exit the industry in the long run. Since fixed cost is $30, average variable cost is ($280 - $30)/10 = $25, which is less than price, so Bob wonât shut down in the short run. 6.