Number of Workers Output (thousands) Fixed Cost ($) Variable Cost ($)

Question

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

$0.43
0.43 dollars

$300
300 dollars

$100
100 dollars

$0.10

Answer 1

To calculate the marginal cost of increasing production from 5,000 units to 6,000 units, we need to determine the change in total cost and the change in output between these two production levels.

1. Calculate Total Cost at each production level:

   • Total Cost (TC) = Fixed Cost + Variable Cost
   • For 5,000 units (20 workers, according to the output):
     • Fixed Cost = $2000
     • Variable Cost = $200
     • TC at 5,000 units = $2000 + $200 = $2200
   • For 6,000 units (30 workers):
     • Fixed Cost = $2000
     • Variable Cost = $300
     • TC at 6,000 units = $2000 + $300 = $2300

2. Calculate Change in Total Cost:

   • Change in Total Cost = TC at 6,000 units - TC at 5,000 units
   • Change in Total Cost = $2300 - $2200 = $100

3. Calculate Change in Output:

   • Change in Output = 6,000 units - 5,000 units = 1,000 units

4. Calculate Marginal Cost:

   • Marginal Cost (MC) = Change in Total Cost / Change in Output
   • MC = $100 / 1,000 units = $0.10 per unit

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

Final Answer: $0.10