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) $\$ 137$
(B) This cannot be determined based on the information given.
(C) $\$ 171$
(D) $\$ 100$
() $\$ 311$

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) $\$ 137$
(B) This cannot be determined based on the information given.
(C) $\$ 171$
(D) $\$ 100$
() $\$ 311$

Accepted Answer

∻Solution∻ ‖ a ⋮ Marginal Cost Calculation: Marginal cost (MC) is the increase in total cost when one additional unit is produced. ‖ ‖ b ⋮ Using the Data: To find the MC of the fifth unit, subtract the total cost of producing four units from the total cost of producing five units. ‖ ‖ c ⋮ Mathematical Expression: MC = TC_5 - TC_4, where TC_5 is the total cost of producing 5 units and TC_4 is the total cost of producing 4 units. ‖ ‖ d ⋮ Given Data: TC_5 = $855, TC_4 is not given directly but can be calculated as TC_3 + MC_4. ‖ ‖ e ⋮ Calculate TC_4: TC_3 = $547, MC_4 = $137, so TC_4 = TC_3 + MC_4 = $547 + $137 = $684. ‖ ‖ f ⋮ Calculate MC_5: MC_5 = TC_5 - TC_4 = $855 - $684 = $171. ‖ ∻Answer∻ ⚹ $171 ⚹ ∻Key Concept∻ ⚹ Marginal cost is the additional cost of producing one more unit of output. ⚹ ∻Explanation∻ ⚹ The marginal cost of producing the fifth unit is calculated by the change in total cost when moving from four to five units of output. ⚹◊What impact would an increase in the price of raw materials have on the firm's cost structure and production decisions in the short run?⍭ Generate me a similar question◊

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