A firm has a fixed cost of $500 in its first year of operation. When the firm produces 100 units of output, its total costs are $3,500. When it produces 101 units of output, its total costs are $3,750. What is the marginal cost of producing the 101st unit of output?
A)$250
B)$275
C)$340.91
D)$350

Question

Quizplus · Accepted Answer

The marginal cost is the change in total cost when one additional unit is produced. The total cost increases from $3,500 to $3,750 when the 101st unit is produced, so the marginal cost is $3,750 - $3,500 = $250.

A Firm Has a Fixed Cost of $500 in Its