Scenario 1-1
Suppose a t-shirt manufacturer currently sells 5,000 t-shirts per week and makes a profit of $10,000 per week.A manager at the plant observes,"Although the last 400 t-shirts we produced and sold increased our revenue by $4,000 and our costs by $4,800,we are still making an overall profit of $10,000 per week so I think we're on the right track.We are producing the optimal number of t-shirts."
-Refer to Scenario 1-1.Using marginal analysis terminology,what is another economic term for the incremental cost of producing the last 400 t-shirts?
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 400 t-shirts is known as the marginal cost, which is the additional cost incurred in producing one more unit.

Scenario 1-1 Suppose a T-Shirt Manufacturer Currently Sells 5,000 T-Shirts Per Week