Tiny Totts is a nursery school for kindergarten children. When there are twenty children enrolled, total revenues and total costs are $6,000 and $3,200, respectively. When there are twenty-one children enrolled, total revenues and total costs are $6,300 and $3,255, respectively. The marginal cost when the twenty-first student enrolls in the school is:
A)$55.
B)$155.
C)$300.
D)$3,045.
E)$3,255.

Question

Quizplus · Accepted Answer

Marginal cost is the change in total cost divided by the change in quantity. In this case, the change in total cost is $3,255 - $3,200 = $55, and the change in quantity is 21 - 20 = 1. Therefore, the marginal cost is $55 / 1 = $55.

Tiny Totts Is a Nursery School for Kindergarten Children