Use the table to answer the question.
Number of Workers Output (thousands) Fixed Cost ($) Variable Cost ($)
10 3 2000 100
20 5 2000 200
30 6 2000 300
What is the marginal cost of increasing production from 5,000 units to 6,000 units?
To find the marginal cost of increasing production from 5,000 units to 6,000 units, we need to look at the change in total cost.
The total cost of producing 5,000 units is calculated using the formula: Total Cost = Fixed Cost + (Variable Cost * Output). From the table, we can see that the fixed cost is $2,000 and the variable cost is $100 (thousands).
Plugging in the values, the total cost of producing 5,000 units is:
Total Cost = $2,000 + ($100 * 5) = $2,500.
Similarly, the total cost of producing 6,000 units is:
Total Cost = $2,000 + ($100 * 6) = $2,600.
The marginal cost of increasing production from 5,000 units to 6,000 units is the difference in total costs.
Marginal Cost = Total Cost (6,000 units) - Total Cost (5,000 units)
= $2,600 - $2,500
= $100.
Therefore, the marginal cost of increasing production from 5,000 units to 6,000 units is $100.