If a firm has a fixed cost of $200,000,and a variable cost of $130,000 at an output of one,how much is marginal cost at an output of one?
A)$70,000
B)$130,000
C)$200,000
D)$270,000
E)There is insufficient information to answer the question.

Question

Quizplus · Accepted Answer

Marginal cost represents the change in total cost that results from producing one additional unit of output.

At an output of one, the total cost is the sum of the fixed cost and variable cost:

Total Cost = Fixed Cost + Variable Cost 
Total Cost = $200,000 + $130,000 
Total Cost = $330,000

To calculate the marginal cost at an output of one, we can find the total cost of producing two units and subtract the total cost of producing one unit:

Marginal Cost = (Total Cost of Two Units - Total Cost of One Unit) / (Two Units - One Unit)

Total Cost of Two Units = Fixed Cost + (2 x Variable Cost) 
Total Cost of Two Units = $200,000 + (2 x $130,000) 
Total Cost of Two Units = $460,000

Total Cost of One Unit = Fixed Cost + Variable Cost 
Total Cost of One Unit = $200,000 + $130,000 
Total Cost of One Unit = $330,000

Marginal Cost = ($460,000 - $330,000) / (2 - 1) 
Marginal Cost = $130,000

Therefore, the marginal cost at an output of one is $130,000.

If a Firm Has a Fixed Cost of $200,000,and a Variable