Question

5. Three cake makers have very different ways of operating their businesses. The table below shows the total cost for each of them, for making cakes. Quantity of cakes Ciara's total cost Linda's total cost SO $0 1 $8 $12 $20 ut WN Ryan's total cost SO $211311 $ 53 $10 $1919 $33 $53 $25 $28 $16 $24 $32 $40 $48 $29 $29 / / / / a) Calculate the marginal costs for each cake maker. b) Draw the marginal cost curve for each. c) Who has increasing marginal cost, who has decreasing marginal cost, and who has constant marginal cost?

Answer 1

a) Marginal Cost = Total Cost at Qth unit - Total Cost at (Q - 1)th Unit

Quantity of Cakes	Clara's Total Cost	Clara's Marginal Cost
0	0	-
1	12	12
2	20	8
3	25	5
4	28	3
5	29	1
6	29	0

Quantity of Cakes	Ryan's Total Cost	Ryan's Marginal Cost
0	0	-
1	2	2
2	5	3
3	10	5
4	19	9
5	33	14
6	53	20

Quantity of Cakes	Linda's Total Cost	Linda's Marginal Cost
0	0	-
1	8	8
2	16	8
3	24	8
4	32	8
5	40	8
6	48	8

b)

Clara's Marginal Cost Margina Cost 2 3 4 Quantity 5 6 7

Ryan's Marginal Cost Margina Cost 5 6 7 3 4 Quantity

Linda's Marginal Cost Margina Cost 1 2 3 4 Quantity 5 6 7

c) Increasing Marginal Cost : Ryan's Marginal Cost

Decreasing Marginal Cost :Clara's Marginal Cost

Constant Marginal Cost : Linda's Marginal Cost