Table 14-13
Diana's Dress Emporium
-Refer to Table 14-13. What is the marginal cost of the 1st unit?
A)$50
B)$75
C)$80
D)$150

Question

Table 14-13
Diana's Dress Emporium 
-Refer to Table 14-13. What is the marginal cost of the 1st unit?
A)$50 
B)$75 
C)$80 
D)$150

Quizplus · Accepted Answer

The marginal cost of the 1st unit is calculated by subtracting the total cost of producing 1 unit ($1,500) from the total cost of producing 2 units ($1,550). This gives us a marginal cost of $50.

Based on the table, the best choice would depend on the market price for the dresses. If the market price is above $300, then Diana's Dress Emporium should produce 3 dresses to maximize profits since the marginal revenue of the 3rd dress ($200) is greater than its marginal cost ($150). If the market price is below $300, then Diana's Dress Emporium should only produce 2 dresses since the marginal revenue of the 3rd dress would be less than its marginal cost, resulting in a loss.

Table 14-13 Diana's Dress Emporium