Use the table to answer the question.

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

$0.43
0.43 dollars

$300
300 dollars
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Answer 1

To find the marginal cost (MC) of increasing production from 5,000 units to 6,000 units, we can follow these steps:

1. Identify the output levels and costs associated with them:

   • At 5,000 units (from the table, 20 workers generate an output of 5,000 units), the total cost can be calculated as: \[ \text{Total Cost (TC) at 5,000 units} = \text{Fixed Cost} + \text{Variable Cost} \] For 5,000 units:

     • Fixed Cost = $2000
     • Variable Cost = $200 (for 20 workers)

     Therefore, \[ TC = 2000 + 200 = 2200 \]

   • At 6,000 units (from the table, 30 workers generate an output of 6,000 units), the total cost is: \[ \text{Total Cost (TC) at 6,000 units} = \text{Fixed Cost} + \text{Variable Cost} \] For 6,000 units:

     • Fixed Cost = $2000
     • Variable Cost = $300 (for 30 workers)

     Therefore, \[ TC = 2000 + 300 = 2300 \]

2. Calculate the change in total cost and change in output:

   • Change in Total Cost (TC): \[ \Delta TC = TC \text{ at 6,000 units} - TC \text{ at 5,000 units} = 2300 - 2200 = 100 \]
   • Change in Output (Q): \[ \Delta Q = 6000 - 5000 = 1000 \]

3. Calculate the Marginal Cost (MC): \[ MC = \frac{\Delta TC}{\Delta Q} = \frac{100}{1000} = 0.10 \]

Thus, the marginal cost of increasing production from 5,000 units to 6,000 units is $0.10.