Marginal Cost

question 6

Multiple Choice

Marginal cost

• A) measures how total cost changes when input prices change.
• B) measures how total cost changes when one more unit of output is produced.
• C) is less than average cost when average cost is decreasing.
• D) both a and b
• E) both b and c
• Questions 49 through 53 refer to the following:
• Suppose that the firm's only variable input is labor. When 50 workers are used, the average product of labor is 50 and the marginal product of labor is 75. The wage rate is $80 and the total cost of the fixed input is $500.