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 fourth cake?
A)$8
B)$10
C)$25
D)$35

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 fourth cake?
A)$8 
B)$10 
C)$25 
D)$35

Quizplus · Accepted Answer

The marginal cost of producing an additional unit (in this case, the fourth cake) is the change in total cost when one more unit is produced. Since fixed costs do not change with the level of production, the marginal cost is determined by the change in variable costs alone. Without the specific numbers from the table, a general explanation is that if the cost of the third cake and the cost of the fourth cake are known, the marginal cost of the fourth cake would be the difference in total cost between producing three cakes and four cakes, excluding the fixed cost of $10. Given the answer, it suggests that the cost associated with producing the fourth cake (beyond the cost of the first three cakes) is $8.

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