Question

Suppose Billy Bud's Bucking Broncos employs 20 workers at a daily wage rate of $60 each. The average product of labor is 30 bucking broncos per day; the marginal product of the last worker is 12 bucking broncos per day; and total fixed cost is $3,600 for equipment. What is the marginal cost of the last bucking bronco produced?

a. $5.00

b. $240.00

c. $720.00

d. $0.20

Answer 1

a

Step-by-step explanation:

Answer 2

a. $5.00

Step-by-step explanation:

Marginal cost is the cost of each extra unit sold or produced.

Average total cost is the average cost of all the units which is sold or produced during the period.

Marginal cost can be calculate by the total cost divided by the numbers of unit.

Marginal Cost of last bucking = Daily Wage / Marginal Product of Last worker

Marginal Cost of last bucking = $60 / 12 bucking

Marginal Cost of last bucking = $5 per bucking