Scenario 1-1
Suppose a cell phone manufacturer currently sells 20,000 cell phones per week and makes a profit of $5,000 per week. A manager at the plant observes, "Although the last 3,000 cell phones we produced and sold increased our revenue by $6,000 and our costs by $6,700, we are still making an overall profit of $5,000 per week so I think we're on the right track. We are producing the optimal number of cell phones."
-Refer to Scenario 1-1.Using marginal analysis terminology, what is another economic term for the incremental cost of producing the last 3,000 cell phones?
A)marginal cost
B)operating cost
C)explicit cost
D)Any of the above terms are correct.

Question

Quizplus · Accepted Answer

The incremental cost of producing the last 3,000 cell phones is referred to as the marginal cost, which is the additional cost of producing one more unit.

Scenario 1-1 Suppose a Cell Phone Manufacturer Currently Sells 20,000 Cell Phones