Use the following to answer question:
-(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

Question

Use the following to answer question: 
-(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

Quizplus · Accepted Answer

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.

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