Question

Quantity Total Cost Q Variable Marginal Cost Marginal Cost Cost MC MC VC (calculated (calculated using TC) using VC) TC O dozen pizzas $300 $0 ܝܕ 350 50 390 90 N 3 420 120 4 450 150 5 490 190 6 540 240

Answer 1

Q	TC	VC	MC =(Change in TC)	MC=(Change in VC)
0	300	0	-	-
1	350	50	50	50
2	390	90	40	40
3	420	120	30	30
4	450	150	30	30
5	490	190	40	40
6	540	240	50	50

Pizzeri's fixed cost = TC-VC = $(300-0)= $300.

Hence, option(B) is correct.

Marginal cost is the same whether it is calculated from total cost or variable cost. The reason is that the change in cost of production is captured by variable cost.The reason is that the change in cost of production is captured by variable cost not by fixed cost which does not change when output changes. Hence, option(A) is correct.