Asked by Olympia Thompson on May 11, 2024
Verified
(Table: Costs of Birthday Cakes) Use Table: Costs of Birthday Cakes.Assume that fixed costs are $10.What is the marginal cost of the fifth cake?
A) $2
B) $10
C) $12
D) $20
Marginal Cost
The monetary outlay for producing an additional unit of a good or service.
Fixed Costs
Expenses that do not change in the short term regardless of the level of production or sales, such as rent and salaries.
- Determine the average variable expense, comprehensive total expense, and marginal expense from the specified data.
Verified Answer
FR
Feranmi RaymondMay 14, 2024
Final Answer :
C
Explanation :
The marginal cost is the change in total cost divided by the change in quantity. The total cost of producing 4 cakes is $26, and the total cost of producing 5 cakes is $38. So, the change in total cost is $12 ($38 - $26) and the change in quantity is 1. Therefore, the marginal cost of the fifth cake is $12.
Learning Objectives
- Determine the average variable expense, comprehensive total expense, and marginal expense from the specified data.