-The table above gives a firm's total product schedule. Suppose labour is the only variable factor of production. The price of labour is $500 per worker per week and total fixed costs are $600 per week. What is the marginal cost when production increases from 85 to 95 units per week?
A) $50.00
B) $31.61
C) $24.92
D) $10.00

Question

-The table above gives a firm's total product schedule. Suppose labour is the only variable factor of production. The price of labour is $500 per worker per week and total fixed costs are $600 per week. What is the marginal cost when production increases from 85 to 95 units per week?
A) $50.00 
B) $31.61 
C) $24.92 
D) $10.00

Quizplus · Accepted Answer

The marginal cost (MC) is the increase in total cost when producing one more unit of output. Since labor is the only variable cost, the increase in total cost from producing 10 more units (from 85 to 95) is the cost of hiring additional labor. If one worker is needed to increase production by 10 units, and each worker costs $500 per week, then the marginal cost is $500 divided by 10, which equals $50.00.

-The Table Above Gives a Firm's Total Product Schedule