The following table shows the cost of producing different units of ball point pens by a firm. Table 7.1

- Refer to Table 7.1.What is the marginal cost of producing the fourth and the fifth unit?
A)$4
B)$6
C)$8
D)$2
E)$10

Question

The following table shows the cost of producing different units of ball point pens by a firm. Table 7.1

- Refer to Table 7.1.What is the marginal cost of producing the fourth and the fifth unit?
A)$4 
B)$6 
C)$8 
D)$2 
E)$10

Quizplus · Accepted Answer

To calculate the marginal cost, we need to find the difference between the total cost of producing n units and n-1 units. 
- The total cost of producing 3 units is $15. 
- The total cost of producing 4 units is $21. 
Therefore, the marginal cost of producing the fourth unit is $6 ($21-$15). 
- The total cost of producing 4 units is $21. 
- The total cost of producing 5 units is $29. 
Therefore, the marginal cost of producing the fifth unit is $8 ($29-$21). 
The best choice is B as it gives the correct marginal cost values for producing the fourth and fifth unit.

The Following Table Shows the Cost of Producing Different Units