Question

The chart shows the marginal cost of producing apple pies.

A 3-column table titled the cost of pie production has 7 rows. The first column is labeled Pies produced per day with entries 0, 1, 2, 3, 4, 5, 6. The second column is labeled Total cost with entries 0, 1, 1.50, 1.75, 2.25, 3.50, 5. The third column is labeled Marginal cost with entries 0, 1, 0.50, 0.25, 0.50, 1.25, and 1.50.
According to the chart, the marginal cost of producing the second pie is
.

Answer 1

The subject is a business-related scenario where a price decrease leads to a situation where the total cost of producing raspberries exceeds the total revenue, resulting in financial losses for the farm.

Step-by-step explanation:

The chart you're referring to illustrates an economic scenario where the market price of a good, in this case, packs of frozen raspberries, affects total revenue and profitability for a farm in a perfectly competitive market.

When the market price drops to $2.00, the intersection of marginal revenue (MR) with marginal cost (MC) occurs at a quantity of 65 packs. The total revenue is represented by the area of a large shaded rectangle extending from the origin to a quantity of 65 and up to the height of the $2 price level.

However, since the average cost to produce these packs is $2.73, represented by Point C", the total cost is greater than the total revenue, resulting in losses. This loss is visually depicted as a rose-shaded rectangle between the total revenue and total cost rectangles. Recapitulating the situational analysis, the farm incurs a loss because the cost of production surpasses the earnings from sales at the current market price.