Use the following to answer questions: Table: Oil Pumps $$\begin{array} { c c c c }
\hline { \text { Oil Pump One } } && { \text { Oil Pump Two } } \
\begin{array} { c }
\text { Quantity } \
\text { (Barrels of Oil) }
\end{array} & \begin{array} { c }
\text { Marginal } \
\text { Cost }
\end{array} & \begin{array} { c }
\text { Quantity } \
\text { (Barrels of Oil) }
\end{array} & \begin{array} { c }
\text { Marginal } \
\text { Cost }
\end{array} \
\hline 1 & 5 & 1 & 10 \
2 & 10 & 2 & 12 \
3 & 15 & 3 & 14 \
4 & 20 & 4 & 16 \
5 & 25 & 5 & 18 \
6 & 30 & 6 & 20 \
7 & 35 & 7 & 22 \
\hline
\end{array}$$
-(Table: Oil Pumps) Refer to the table. Suppose that we want to produce seven barrels of oil. To minimize costs, we should produce:
A) all seven barrels of oil from Oil Pump Two.
B) three barrels of oil from Oil Pump One and four barrels of oil from Oil Pump Two.
C) one barrel of oil from Oil Pump One and six barrels of oil from Oil Pump Two.
D) all seven barrels of oil from Oil Pump One.

Question

Use the following to answer questions: Table: Oil Pumps $$\begin{array} { c c c c } 
\hline  { \text { Oil Pump One } } && { \text { Oil Pump Two } } \
\begin{array} { c } 
\text { Quantity } \
\text { (Barrels of Oil) }
\end{array} & \begin{array} { c } 
\text { Marginal } \
\text { Cost }
\end{array} & \begin{array} { c } 
\text { Quantity } \
\text { (Barrels of Oil) }
\end{array} & \begin{array} { c } 
\text { Marginal } \
\text { Cost }
\end{array} \
\hline 1 & 5 & 1 & 10 \
2 & 10 & 2 & 12 \
3 & 15 & 3 & 14 \
4 & 20 & 4 & 16 \
5 & 25 & 5 & 18 \
6 & 30 & 6 & 20 \
7 & 35 & 7 & 22 \
\hline
\end{array}$$
-(Table: Oil Pumps) Refer to the table. Suppose that we want to produce seven barrels of oil. To minimize costs, we should produce:
A) all seven barrels of oil from Oil Pump Two.
B) three barrels of oil from Oil Pump One and four barrels of oil from Oil Pump Two.
C) one barrel of oil from Oil Pump One and six barrels of oil from Oil Pump Two.
D) all seven barrels of oil from Oil Pump One.

Quizplus · Accepted Answer

To minimize costs, we should produce where the marginal cost is lowest. Producing three barrels from Oil Pump One and four barrels from Oil Pump Two results in the lowest total marginal cost.

Use the Following to Answer Questions: Table: Oil Pumps -(Table: Oil Pumps) Refer to the Table