The table below contains costs incurred by Fantabulous Enterprises, Inc., but some values are missing. Assume that the quantity where average total cost is minimized is a whole number and included in this table.
\begin{tabular}{lllll}
Quantity & Variable costs & Total Costs & Marginal costs & Average total costs \
\hline 0 & & $\$ 100$ & & \
1 & & $\$ 279$ & $\$ 179$ & $\$ 279$ \
2 & $\$ 320$ & $\$ 420$ & $\$ 141$ & $\$ 210$ \
3 & $\$ 447$ & $\$ 547$ & $\$ 127$ & $\$ 182$ \
4 & $\$ 584$ & & $\$ 137$ & $\$ 173$ \
5 & $\$ 755$ & $\$ 855$ & & $\$ 171$ \
6 & & $\$ 1084$ & $\$ 229$ & $\$ 180$ \
7 & $\$ 1295$ & $\$ 1395$ & $\$ 311$ & $\$ 200$
\end{tabular}

What is this firm's marginal cost of producing the fifth unit of output?
Choose 1 answer:
(A) $\$ 311$
(B) This cannot be determined based on the information given.
(C) $\$ 171$

Question

The table below contains costs incurred by Fantabulous Enterprises, Inc., but some values are missing. Assume that the quantity where average total cost is minimized is a whole number and included in this table.
\begin{tabular}{lllll} 
Quantity & Variable costs & Total Costs & Marginal costs & Average total costs \
\hline 0 & & $\$ 100$ & & \
1 & & $\$ 279$ & $\$ 179$ & $\$ 279$ \
2 & $\$ 320$ & $\$ 420$ & $\$ 141$ & $\$ 210$ \
3 & $\$ 447$ & $\$ 547$ & $\$ 127$ & $\$ 182$ \
4 & $\$ 584$ & & $\$ 137$ & $\$ 173$ \
5 & $\$ 755$ & $\$ 855$ & & $\$ 171$ \
6 & & $\$ 1084$ & $\$ 229$ & $\$ 180$ \
7 & $\$ 1295$ & $\$ 1395$ & $\$ 311$ & $\$ 200$
\end{tabular}

What is this firm's marginal cost of producing the fifth unit of output?
Choose 1 answer:
(A) $\$ 311$
(B) This cannot be determined based on the information given.
(C) $\$ 171$

Accepted Answer

∻Solution∻ ‖ a ⋮ Marginal Cost Definition: Marginal cost (MC) is the additional cost incurred by producing one more unit of a good or service. It is calculated as the change in total cost (TC) divided by the change in quantity (Q). ‖ ‖ b ⋮ Calculation of Marginal Cost for the Fifth Unit: To find the marginal cost of producing the fifth unit, we need to determine the change in total cost when the quantity increases from 4 to 5 units. The total cost for 4 units is not directly given, but we can infer it from the variable costs and fixed costs. The total cost for 5 units is $855. ‖ ‖ c ⋮ Total Cost for 4 Units: The total cost for 4 units can be calculated using the given variable cost for 4 units ($584) and the fixed cost (which is the total cost at 0 units, $100). Therefore, the total cost for 4 units is $584 + $100 = $684. ‖ ‖ d ⋮ Marginal Cost Calculation: The marginal cost of producing the fifth unit is the difference in total cost between producing 5 units and 4 units. Thus, $MC = \frac{\Delta TC}{\Delta Q} = \frac{TC_5 - TC_4}{5 - 4} = \frac{855 - 684}{1} = 171$. ‖ ∻Answer∻ ⚹ $171 ⚹ ∻Key Concept∻ ⚹ Marginal Cost Calculation ⚹ ∻Explanation∻ ⚹ The marginal cost of producing the fifth unit is calculated by finding the difference in total cost between producing 5 units and 4 units. The total cost for 4 units is inferred from the variable cost and fixed cost, and the marginal cost is the change in total cost divided by the change in quantity.◊What impact would a decrease in variable costs have on the average total cost for Fantabulous Enterprises, Inc.?⍭ Generate me a similar question◊⚹

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