Scenario 1-4
Suppose a cigar manufacturer currently sells 1,500 cigars per week and makes a profit of $3,000 per week. The plant foreman observes, "Although the last 500 cigars we produced and sold increased our revenue by $7,500 and our costs by $7,000, we are only making an overall profit of $3,000 per week so I think we need to cut back on production

-Refer to Scenario 1-4. Using marginal analysis terminology, what is another economic term for the incremental cost of producing the last 500 cigars?

Question

Scenario 1-4
Suppose a cigar manufacturer currently sells 1,500 cigars per week and makes a profit of $3,000 per week. The plant foreman observes, "Although the last 500 cigars we produced and sold increased our revenue by $7,500 and our costs by $7,000, we are only making an overall profit of $3,000 per week so I think we need to cut back on production

-Refer to Scenario 1-4. Using marginal analysis terminology, what is another economic term for the incremental cost of producing the last 500 cigars?

Quizplus · Accepted Answer

The incremental cost of producing the last 500 cigars is referred to as the marginal cost, which is the additional cost incurred from producing one more unit of a good or service.

Scenario 1-4 Suppose a Cigar Manufacturer Currently Sells 1,500 Cigars Per Week