Question

The total cost changes by dollars per week, rounded to the nearest cent, when units are being produced and the level of production is increasing at the rate of units per week.

a) 0.01
b) 0.1
c) 1.0
d) 10.0

Answer 1

The question deals with the calculation of marginal cost in production economics, with widget workers earning $10 per hour. Marginal cost is calculated as the change in total cost divided by the change in output quantity.

Step-by-step explanation:

The student's question seems to be related to the concept of marginal cost and its calculation in the context of production economics. However, as the exact numbers appear to be missing from the question, we can provide an explanation of the concept using the provided information.

For instance, if widget workers receive $10 per hour, the cost of labor for producing widgets at different levels of output can be calculated by multiplying the number of hours worked (Workers) by the wage rate ($10). Moreover, the total cost of production takes into account both fixed costs and variable costs.

Fixed costs, such as rent or equipment, do not change with the level of production. Variable costs, such as labor or materials, change directly with the level of production.

To calculate the marginal cost (MC), which is the cost of producing one more unit of output, we consider the change in total cost (TC) that results from a change in output (Q). The formula for marginal cost is:

MC = ΔTC / ΔQ

Where ΔTC represents the change in total cost and ΔQ represents the change in output (the rate at which production is increasing).

Using the example provided, if the cost of producing one widget is $32.50 and the cost of producing two widgets is $44, we find the marginal cost for the second widget:

MC = ($44 - $32.50) / (2 - 1) = $11.50