Question

Number of workers: 10, 20, 30
Output(thousands): 3, 5, 6
Fixed Cost ($): 2000, 2000, 2000
Variable Cost ($): 100, 200, 300

In the table above, what is the marginal cost of increasing production from 3,000 to 5,000 units? Choose from answers below.

-$0.10
-$0.05
-$100
-$2100

Answer 1

The marginal cost is the change in cost divided by the change in quantity produced. In this case, the change in quantity produced is 2000 units (5000 - 3000). The change in cost is the difference between the cost of producing 5000 units and the cost of producing 3000 units.

The cost of producing 3000 units is ($2000 + $100 * 3000) = $5000.
The cost of producing 5000 units is ($2000 + $100 * 5000) = $7000.

Therefore, the change in cost is $7000 - $5000 = $2000.

Now, we can calculate the marginal cost:

Marginal Cost = Change in Cost / Change in Quantity Produced
Marginal Cost = $2000 / 2000 = $1

So, the marginal cost of increasing production from 3000 to 5000 units is $1.

Therefore, the correct answer is not included in the options provided.