1. The Omnibus Corporation finds that its daily costs are $50 when it produces no output. Its total variable costs (TVC) change with output as shown in the accompanying table. Use this information to answer the following question(s).
Output TVC
1 $36
2 $57
3 $73
4 $94
5 $120
Refer to the above information. The marginal cost of the fourth unit of output is:
A) $73.
B) $94.
C) $21.
D) $23.50.
E) $24.50.
To find the marginal cost of the fourth unit of output, you need to calculate the change in total variable cost (TVC) when output increases from 3 units to 4 units.
First, identify the TVC for the fourth unit of output, which is $94.
Next, find the TVC for the third unit of output, which is $73.
To calculate the change in TVC, subtract the TVC for the third unit of output from the TVC for the fourth unit of output: $94 - $73 = $21.
Therefore, the marginal cost of the fourth unit of output is $21.
So, the correct answer is C) $21.