Refer to the following:
The capital stock is fixed at 40 units, the price of capital is $15 per unit, and the price of labor is $80 per unit.
$$\begin{array} { c c }
\text { units of } & \text { units of } \
\text { Labor } & \text { Output } \
\hline 5 & 40 \
10 & 100 \
15 & 180 \
20 & 220
\end{array}$$
-How much does the 50th unit of output add to the firm's total cost?
A) $6.67
B) $10
C) $400
D) $600
E) none of the above

Question

Refer to the following:
The capital stock is fixed at 40 units, the price of capital is $15 per unit, and the price of labor is $80 per unit.
 $$\begin{array} { c c } 
\text { units of } & \text { units of } \
\text { Labor } & \text { Output } \
\hline 5 & 40 \
10 & 100 \
15 & 180 \
20 & 220
\end{array}$$
-How much does the 50th unit of output add to the firm's total cost?
A) $6.67
B) $10
C) $400
D) $600
E) none of the above

Quizplus · Accepted Answer

The marginal cost of production is the change in total cost divided by the change in output. In this case, the change in output is 20 units (from 40 to 60 units), and the change in total cost is $300 (from $600 to $900). Therefore, the marginal cost of production is $300 / 20 = $15 per unit. The 50th unit of output will add $15 to the firm's total cost.

Refer to the Following: the Capital Stock Is Fixed at 40

Refer to the Following:
the Capital Stock Is Fixed at 40