Table 1-3
Ivan runs a custom jewelry shop in Sparkle City.He is debating whether he should extend his hours of operation.Ivan figures that his sales revenue will depend on the number of additional hours the jewelry shop is open as shown in the table above.He would have to hire a worker for those hours at a wage rate of $25 per hour.
-Refer to Table 1-3.What is Ivan's marginal cost if he decides to stay open for six hours instead of five hours?
A)$10
B)$20
C)$25
D)$91.67

Question

Table 1-3
  Ivan runs a custom jewelry shop in Sparkle City.He is debating whether he should extend his hours of operation.Ivan figures that his sales revenue will depend on the number of additional hours the jewelry shop is open as shown in the table above.He would have to hire a worker for those hours at a wage rate of $25 per hour.
-Refer to Table 1-3.What is Ivan's marginal cost if he decides to stay open for six hours instead of five hours?
A)$10 
B)$20 
C)$25 
D)$91.67

Quizplus · Accepted Answer

To calculate the marginal cost, we need to find the additional cost of staying open for one more hour. From the table, we can see that the total cost of staying open for 5 hours is $200, and the total cost of staying open for 6 hours is $225.

Therefore, the additional cost of staying open for one more hour is:

$225 - $200 = $25

So the marginal cost of staying open for six hours instead of five hours is $25.

Since the marginal cost is lower than the revenue increase from staying open for one extra hour, it is profitable for Ivan to extend his hours of operation.

Table 1-3 Ivan Runs a Custom Jewelry Shop in Sparkle