If a firm's total fixed costs are $30, the firm's marginal cost of producing the first unit of output is $30, and the average total cost of producing two units of output is $42, the marginal cost of the second unit of output is
A) $84.
B) $54.
C) $42.
D) $24.

Question

Quizplus · Accepted Answer

We can start by using the formula for average total cost (ATC):

ATC = Total Cost / Quantity

We are given that the total fixed costs are $30, so we can set up the equation:

ATC(2) = (Total Cost + $30) / 2 = $42

Solving for the total cost, we get:

Total Cost = $84 - $30 = $54

Now we can use the formula for marginal cost (MC):

MC = Change in Total Cost / Change in Quantity

The change in quantity from 1 unit to 2 units is 1, and the change in total cost is:

$54 - $30 = $24

So the marginal cost of the second unit of output is:

MC(2) = $24 / 1 = $24

If a Firm's Total Fixed Costs Are $30, the Firm's