How to Calculate the Cost of Necklaces and Pendants

What is the cost of each pendant in Laura's necklaces?

The total cost of the beads and pendants for all 3 necklaces was $21.30. If the beads cost a total of $10.50, then each pendant cost $3.50.

Understanding Total Cost and Marginal Cost

Total economic cost includes the total opportunity cost (benefit from suboptimal alternatives) of each element of production as part of fixed or variable costs. Marginal cost can also be calculated by taking the derivative of the total or variable cost. Total cost includes variable and fixed costs, but since fixed costs are constant with a derivative of 0, any of these derivatives will work. The total cost of production varies with the number of goods produced and is made up of variable costs, including inputs such as labor and raw materials, and fixed costs, which are independent of the number of goods produced. In Laura's case, the total cost of the beads and pendants for all 3 necklaces was $21.30. Since the beads cost $10.50 in total, the remaining cost for the pendants would be $21.30 - $10.50 = $10.80. To find the cost of each pendant, we divide the total cost of pendants by the number of necklaces, which is 3. Therefore, each pendant cost $10.80 / 3 = $3.50. Calculating the cost of production is essential for businesses to understand their expenses and make informed decisions about pricing and profitability. By breaking down the costs of each component, like in Laura's necklaces, businesses can optimize their operations and maximize their profits.
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