Labor is the only variable input for Elliot's dog-walking service. His labor costs are $300 a day and his service walks 25 dogs per day. His labor costs increase to $315.50 a day to walk 26 dogs per day. The marginal cost of walking that 26th dog is
A) $15.50.
B) $19.50.
C) $29.50.
D) indeterminate from the information given.

Question

Quizplus · Accepted Answer

The marginal cost is calculated by the increase in total costs divided by the increase in output. Here, the increase in labor costs ($315.50 - $300 = $15.50) to walk one additional dog (26 - 25 = 1) results in a marginal cost of $15.50.

Labor Is the Only Variable Input for Elliot's Dog-Walking Service