What is the marginal cost of the ninth unit based on the table?
| Output | 0 | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 |
| :------- | :-- | :-- | :-- | :-- | :-- | :-- | :-- | :-- | :-- | :-- | :--- |
| Total cost | 100 | 110 | 115 | 125 | 140 | 160 | 190 | 230 | 280 | 340 | 420 |
Marginal cost: $
Answer (2)
Marginal cost is the change in total cost when producing one more unit.
Identify the total cost of producing 9 units ( $340 ) and 8 units ( $280 ) from the table.
Calculate the marginal cost by subtracting the total cost of 8 units from the total cost of 9 units: $340 − $280 = $60 .
The marginal cost of the ninth unit is 60 .
Explanation
Understanding Marginal Cost We are asked to find the marginal cost of the ninth unit based on the provided table. Marginal cost represents the change in the total cost when one additional unit is produced. In this case, we want to find the difference in total cost between producing 9 units and producing 8 units.
Calculating Marginal Cost From the table, the total cost of producing 9 units is $340, and the total cost of producing 8 units is 280. T o f in d t h e ma r g ina l cos t o f t h e nin t h u ni t , w es u b t r a c tt h e t o t a l cos t o f 8 u ni t s f ro m t h e t o t a l cos t o f 9 u ni t s : M a r g ina lC os t = T o t a lC os t ( 9 u ni t s ) − T o t a lC os t ( 8 u ni t s ) $Marginal Cost = $340 - 280 $
Final Answer Performing the subtraction, we get: Marginal Cost = $60 Therefore, the marginal cost of the ninth unit is $60.
Examples
Marginal cost analysis is crucial in business for making production decisions. For example, a company might use marginal cost to determine the optimal production level. If the marginal cost of producing an additional unit exceeds the revenue gained from that unit, the company may decide to limit production. Understanding marginal cost helps businesses maximize profits and efficiently allocate resources.
The marginal cost of the ninth unit is $60, which is calculated by subtracting the total cost of producing 8 units ($280) from the total cost of producing 9 units ($340). Therefore, it costs an additional $60 to produce the ninth unit. This understanding helps businesses manage their production costs effectively.
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