The table given below shows the average total cost of production of a firm at different levels of the output. Table 7.5

- In Table 7.5,the marginal cost of producing the third unit of output is:
A)$7.
B)$8.
C)$5.
D)$4.
E)$6.

Question

The table given below shows the average total cost of production of a firm at different levels of the output. Table 7.5

- In Table 7.5,the marginal cost of producing the third unit of output is:
A)$7. 
B)$8. 
C)$5. 
D)$4. 
E)$6.

Quizplus · Accepted Answer

Marginal cost is the additional cost incurred when one more unit is produced. 
To find the marginal cost of producing the third unit, we need to look at the change in total cost between producing two units and producing three units. 
Total cost for producing two units = $22 
Total cost for producing three units = $27 
Therefore, the additional cost incurred in producing the third unit is $5 ($27 - $22). 
Hence, the correct answer is C) $5.

The Table Given Below Shows the Average Total Cost of Production