-The table above gives production information for Bob's Baseball Cap Company. Bob's total cost when zero caps are produced is $200 and workers cost $10 per hour. The marginal cost per hat of producing 30 hats per hour (instead of 25) is
A) $240.00 per hat.
B) $250.00 per hat.
C) $8.33 per hat.
D) $2.00 per hat.

Question

-The table above gives production information for Bob's Baseball Cap Company. Bob's total cost when zero caps are produced is $200 and workers cost $10 per hour. The marginal cost per hat of producing 30 hats per hour (instead of 25) is
A) $240.00 per hat. 
B) $250.00 per hat. 
C) $8.33 per hat. 
D) $2.00 per hat.

Quizplus · Accepted Answer

The marginal cost is the additional cost of producing one more unit. If producing 25 hats requires a certain number of worker hours, producing 30 hats requires additional hours. The cost of these additional hours divided by the additional hats produced gives the marginal cost per hat. If the cost of workers is $10 per hour, and the increase from 25 to 30 hats requires 1 additional hour, the marginal cost is $10/5 = $2.00 per hat.

-The Table Above Gives Production Information for Bob's Baseball Cap