For Elliot's dog-walking service, the only variable input is labor. Elliot's labor costs are $300 a day and his service walks 30 dogs per day. To walk 31 dogs per day, his labor costs increase to $305 a day. The marginal cost of walking that 31st dog is
A) $5.
B) $9.83.
C) $19.52.
D) indeterminate from the information given.

Question

Quizplus · Accepted Answer

The marginal cost is calculated by the increase in total costs divided by the increase in output. Here, the cost increases by $5 (from $300 to $305) to walk one additional dog (from 30 to 31 dogs), making the marginal cost $5.

For Elliot's Dog-Walking Service, the Only Variable Input Is Labor