Table 1-6
Ivan runs a custom jewelry shop in Sparkle City. He is debating whether he should extend his hours of operation. Ivan figures that his sales revenue will depend on the number of additional hours the jewelry shop is open as shown in the table above. He would have to hire a worker for those hours at a wage rate of $25 per hour.
-Refer to Table 1-6. What is Ivan's marginal cost if he decides to stay open for six hours instead of five hours?
A) $10
B) $20
C) $25
D) $91.67

Question

Table 1-6
  Ivan runs a custom jewelry shop in Sparkle City. He is debating whether he should extend his hours of operation. Ivan figures that his sales revenue will depend on the number of additional hours the jewelry shop is open as shown in the table above. He would have to hire a worker for those hours at a wage rate of $25 per hour.
-Refer to Table 1-6. What is Ivan's marginal cost if he decides to stay open for six hours instead of five hours?
A) $10 
B) $20 
C) $25 
D) $91.67

Quizplus · Accepted Answer

Ivan's marginal cost is the change in total cost divided by the change in output. If he stays open for six hours instead of five hours, his total cost will increase by $25 (from $75 to $100). His output will also increase by one hour. Therefore, his marginal cost is $25 / 1 hour = $25.

Table 1-6 Ivan Runs a Custom Jewelry Shop in Sparkle