Company XYZ planned to invest $20 million in a new digital camera project. After the initial 5
million dollars were invested, the company realized that cellphones with cameras have become
increasingly popular among consumers and this may significantly reduce the demand for their
new digital cameras. After collecting data and revising the demand for the new cameras, the
estimated sales at completion of the project would be $12 million.
1. what is the marginal cost (Marginal Cost) of continuing with the project?
2. What is the marginal benefit (Marginal Benefit) of continuing with the project?
3. Should the company continue with project (Yes/No)?
4. It costs Company XYZ $20 to make 4 beach towels and $24 to make 5 beach towels. What is the marginal cost of making the 5th towel?
Marginal Cost for the 5th towel =
Answers: 2
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Company XYZ planned to invest $20 million in a new digital camera project. After the initial 5
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