Thelma owns and operates a small meat pie stand at a local farmer's market.When Thelma is producing a small quantity of meat pies,she has few workers and her equipment is not being fully utilized.If she can easily put her idle resources to use,what will happen to the costs of production
A)The marginal cost of an extra worker is large.
B)The marginal cost of one more meat pie is small.
C)The average variable cost of an extra worker will increase.
D)The average variable cost of an extra worker will decrease.

Question

Quizplus · Accepted Answer

When Thelma has idle resources and can easily put them to use, her costs of production will decrease. This is because the marginal cost of producing one more meat pie will be small since she already has the resources to do so. Option A is incorrect because the marginal cost of an extra worker would be small if Thelma has idle resources, not large. Option C is incorrect because the average variable cost of an extra worker would decrease if Thelma has idle resources, not increase. Option D is also incorrect because the average variable cost of an extra worker is not relevant in this scenario.

Thelma Owns and Operates a Small Meat Pie Stand at a Local