A firm pays Pam $40 per hour to assemble personal computers. Each day, Pam can assemble 4 computers if she works 1 hour, 7 computers if she works 2 hours, 9 computers if she works 3 hours, and 10 computers if she works 4 hours. Pam cannot work more than 4 hours day. Each computer consists of a motherboard, a hard drive, a case, a monitor, a keyboard, and a mouse. The total cost of these parts is $600 per computer. What is the marginal cost of producing the computers that Pam can assemble during her 3ʳᵈ hour of work?

Question

Quizplus · Accepted Answer

Pam produces 2 additional computers in her 3ʳᵈ hour. The cost of the parts for these computers is $1,200 (= 2 × $600). In addition, the firm has to pay Pam $40 for that hour. Thus, the marginal cost of producing the computers that Pam can assemble in her 3ʳᵈ hour is $1,240.

A Firm Pays Pam $40 Per Hour to Assemble Personal