When output is 20, fixed costs are $100 and variable costs are $400. When output rises to 21, fixed costs are $100 and variable costs are $450. This implies that the marginal cost of the last unit of output equals:
A) $25.
B) $50.
C) $500.
D) $550.

Question

Quizplus · Accepted Answer

The marginal cost is the change in total cost when output is increased by one unit. The variable cost increases from $400 to $450, so the marginal cost is $450 - $400 = $50.

When Output Is 20, Fixed Costs Are $100 and Variable