Demand and Total Cost of Production

The following questions refer to the following tables which show the demand for a firm's product and the firm's total cost of production.

-Refer to Demand and Total Cost of Production.The marginal cost of producing the second unit is
A) $4 per unit.
B) $7 per unit.
C) $11 per unit.
D) $15 per unit.

Question

Demand and Total Cost of Production

The following questions refer to the following tables which show the demand for a firm's product and the firm's total cost of production.

-Refer to Demand and Total Cost of Production.The marginal cost of producing the second unit is
A) $4 per unit. 
B) $7 per unit. 
C) $11 per unit. 
D) $15 per unit.

Quizplus · Accepted Answer

The marginal cost is equal to the change in total cost divided by the change in quantity produced. Looking at the total cost of production, it increases from $6 for the first unit to $13 for the second unit. Therefore, the change in total cost is $13-$6 = $7. Since the quantity produced changed from 1 to 2, the change in quantity is 2-1 = 1. Thus, the marginal cost of producing the second unit is $7/1 = $7 per unit.