If a price taker spends $400 to produce 20 units of output and spends $880 to produce 40 units,then the marginal cost of increasing production from 20 to 40 units is

Question

Quizplus · Accepted Answer

Marginal Cost (MC) is the additional cost incurred when producing one additional unit of output. 
To calculate MC, we need to find the change in cost divided by the change in output:

MC = (Change in Cost) / (Change in Output)

From the information given, we know: 
- When producing 20 units, the cost is $400 
- When producing 40 units, the cost is $880

To find the MC for increasing production from 20 to 40 units, we use the formula above:

MC = (880 - 400) / (40 - 20) 
MC = 480 / 20 
MC = $24

Therefore, the answer is C ($24).

If a Price Taker Spends $400 to Produce 20 Units