Scenario 10.6:
John is the manufacturer of red rubber balls (Q). He has a red rubber ball manufacturing plant in California, Florida and Montana. The total cost of producing red rubber balls at each of the three plants is given by the following table:
California Florida Montana
Qc TCc Qf TCf Qm TCm
1 5 1 8 1 4
2 10 2 16 2 8
3 15 3 24 3 12
4 20 4 32 4 16
5 25 5 40 5 20
6 30 6 48 6 24
7 35 7 56 7 28
8 40 8 64 8 32
9 45 9 72 9 36
10 50 10 80 10 40
11 infinity 11 infinity 11 infinity
-Refer to Scenario 10.6. If red rubber balls can be produced at any of the three plants, what is the marginal cost of 5th red rubber ball?

Question

Quizplus · Accepted Answer

The marginal cost is the additional cost of producing one more unit. For the 5th ball, the marginal cost is the difference in total cost between producing 5 and 4 balls. In Montana, the cost increases from 16 to 20, so the marginal cost is 4.

Scenario 10.6: John Is the Manufacturer of Red Rubber Balls (Q). He