Table 14-2
The following table presents cost and revenue information for Soper's Port Vineyard.

-Refer to Table 14-2.Consumers are willing to pay $120 per unit of port wine.What is the marginal cost of the 8th unit?

Question

Table 14-2
The following table presents cost and revenue information for Soper's Port Vineyard.
 
-Refer to Table 14-2.Consumers are willing to pay $120 per unit of port wine.What is the marginal cost of the 8th unit?

Quizplus · Accepted Answer

Marginal cost is the cost of producing one more unit of a product. In this case, the marginal cost of the 8th unit is equal to the change in total cost for producing 8 units versus producing 7 units. From the table, we can see that the total cost for producing 7 units is $840, and the total cost for producing 8 units is $960. Therefore, the marginal cost of the 8th unit is $120 (which is equal to the selling price), since the additional unit provides the same revenue as its cost. So, the correct answer is C.

Table 14-2 The Following Table Presents Cost and Revenue Information for Soper's