A firm is producing 4 units of output at an average total cost of $50. When the firm produces 5 units of output, average total cost falls to $45. What is the marginal cost of the fifth unit of output?
A. $10
B. $25
C. $45
D. $70
Answer: B. $25
Total cost for 4 units of output = 50*4 = $200
Total cost for 5 units of output = 45*5 = $225
Marginal cost of the fifth unit of output = $225-$200 = $25
A firm is producing 4 units of output at an average total cost of $50. When...
A firm is producing 4 units of output at an average total cost of $45. When the firm produces 5 units of output, average total cost rises to $50. What is the marginal cost of the fifth unit of output? $10 $25 $45 $70
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