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

$0.43
0.43 dollars

$100
100 dollars

$300
300 dollars

$0.10

Answer 1

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

1. Total Cost Calculation:
   • Total Cost (TC) is the sum of Fixed Cost (FC) and Variable Cost (VC).

For 5,000 units (20 workers):

• FC = $2,000
• VC for 20 workers = $200
• TC at 5,000 units = FC + VC = 2000 + 200 = $2200

For 6,000 units (30 workers):

• FC = $2,000
• VC for 30 workers = $300
• TC at 6,000 units = FC + VC = 2000 + 300 = $2300

2. Change in Total Cost:

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

3. Change in Output:

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

4. Marginal Cost Calculation:

   • Marginal Cost (MC) = Change in Total Cost / Change in Output
   • MC = $100 / 1 = $100

Therefore, the marginal cost of increasing production from 5,000 units to 6,000 units is $100.

The correct response is $100 (100 dollars).