Question

When a cherry orchard in Oregon adds a worker, the total cost of production increases by $24,000. Adding the worker increases total cherry output by 600 pounds. Therefore, the marginal cost of the last pound of cherries produced is:

A. $19.
B. $4,000.
C. $24,000.
D. $40

Answer 1

D. $40

Step-by-step explanation:

Given that

Total cost increased by $24000

Output increased by 600pounds

Recall that

Marginal cost = Change in total cost/change in total output

Thus

Marginal cost = 24000/600

Marginal cost = $40.

Therefore, marginal cost on the last pound of cherry produced is equal to $40