Scenario 13-6
Farmer Jack is a watermelon farmer. If Jack plants no seeds on his farm, he gets no harvest. If he plants 1 bag of seeds, he gets 30 watermelons. If he plants 2 bags of seeds, he gets 50 watermelons. If he plants 3 bags of seeds he gets 60 watermelons. A bag of seeds costs $100, and the costs of seeds are his only costs.
-Refer to Scenario 13-6.Which of the following statements is(are)true of Jack's marginal cost? (i) His marginal cost curve is U-shaped.
(ii) His marginal cost decreases with increased watermelon output.
(iii) His marginal cost reflects diminishing marginal product.

Question

Scenario 13-6
Farmer Jack is a watermelon farmer. If Jack plants no seeds on his farm, he gets no harvest. If he plants 1 bag of seeds, he gets 30 watermelons. If he plants 2 bags of seeds, he gets 50 watermelons. If he plants 3 bags of seeds he gets 60 watermelons. A bag of seeds costs $100, and the costs of seeds are his only costs.
-Refer to Scenario 13-6.Which of the following statements is(are)true of Jack's marginal cost? (i)	His marginal cost curve is U-shaped.
(ii)	His marginal cost decreases with increased watermelon output.
(iii)	His marginal cost reflects diminishing marginal product.

Quizplus · Accepted Answer

Marginal cost reflects the cost of producing an additional unit of output. In this scenario, the only cost incurred is the cost of the seeds, which remains constant at $100 per bag. Therefore, the marginal cost remains constant and does not decrease with increased watermelon output. Additionally, since the production function exhibits diminishing marginal product, the marginal cost reflects this and increases as more bags of seeds are planted. Therefore, statement (iii) is true, and the correct answer is B. Statement (i) is false because the marginal cost does not change with output and therefore does not exhibit a U-shape. Statement (ii) is also false since the marginal cost remains constant with increased watermelon output.

Scenario 13-6 Farmer Jack Is a Watermelon Farmer. If Jack Plants No