Question

How Markets Work Unit Test
10 of 2210 of 22 Items


















Question
Use the table to answer the question.

Number of Workers Output (thousands) Fixed Cost ($) Variable Cost ($)
10 3 2000 100
20 5 2000 200
30 6 2000 300
What is the marginal cost of increasing production from 5,000 units to 6,000 units?

(1 point)
Responses

$100
100 dollars

$0.10
0.10 dollars

$300
300 dollars

$0.43
0.43 dollars

Answer 1

To find the marginal cost (MC) of increasing production from 5,000 units to 6,000 units, we first need to determine the increase in total cost and the increase in output.

1. **Determine the output in thousands:**
- 5,000 units = 5 (in thousands)
- 6,000 units = 6 (in thousands)

2. **Find the total costs at these output levels:**
- For 5,000 units (5 thousand):
- Fixed Cost = $2000
- Variable Cost (at 20 workers) = $200
- Total Cost = Fixed Cost + Variable Cost = $2000 + $200 = $2200

- For 6,000 units (6 thousand):
- Fixed Cost = $2000
- Variable Cost (at 30 workers) = $300
- Total Cost = Fixed Cost + Variable Cost = $2000 + $300 = $2300

3. **Calculate the increase in total cost:**
- Increase in Total Cost = Total Cost at 6,000 units - Total Cost at 5,000 units
- Increase in Total Cost = $2300 - $2200 = $100

4. **Calculate the increase in output:**
- Increase in Output = 6,000 - 5,000 = 1,000 units

5. **Calculate the marginal cost:**
- Marginal Cost (MC) = Increase in Total Cost / Increase in Output
- MC = $100 / 1,000 = $0.10

Therefore, the marginal cost of increasing production from 5,000 units to 6,000 units is **$0.10** (0.10 dollars).

**Correct response: $0.10**