What is the marginal cost of the seventh unit if only whole units are produced?

Rationale

$13.00

Marginal cost is defined as the additional cost incurred to produce one more unit of a good or service. In this case, the marginal cost of producing the seventh unit is determined to be $13.00 based on the cost data provided for the production of units.

A ($13.00) CORRECT

This is the correct answer as it represents the additional cost incurred when increasing production from six units to seven units. The marginal cost specifically measures the increase in total cost that results from producing one more unit, which, in this scenario, is calculated to be $13.00.

B ($13.71) YOUR ANSWER

This value might represent a miscalculation or an average cost rather than the marginal cost. Marginal cost specifically looks at the cost of producing the next unit, whereas $13.71 does not align with the additional cost incurred when moving from six to seven units.

C ($7.29) YOUR ANSWER

This choice likely reflects the average cost per unit when a certain number of units are produced but does not represent the marginal cost for the seventh unit. Marginal cost varies with production levels and should reflect the specific increase for that individual unit.

D ($16.00) YOUR ANSWER

This option may indicate a misunderstanding of cost accumulation in production. A marginal cost of $16.00 implies a significantly higher cost for the seventh unit than calculated. In reality, the marginal cost should be lower than the total cost of previous units, making this choice incorrect.

Conclusion

The marginal cost of producing an additional unit is critical for understanding production efficiency and pricing strategies. In this case, the marginal cost of the seventh unit is accurately determined to be $13.00, reflecting the specific cost increase incurred from the previous unit. Other choices either misinterpret the concept of marginal cost or reflect average costs rather than the cost associated with producing one more unit.

What is the marginal cost of the seventh unit if only whole units are produced?

$13.00

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