Question

Using this table, calculate the marginal cost of each of these quantities of bikes.

The first bike: $
The fourth bike: $
The sixth bike: $
The seventh bike: $

Answer 1

The marginal cost is how much it costs to produce one item more. It cost 0$ to produce 0 bikes but if you make one, then it costs 80$. Hence the marginal cost for the first bike is 80$. For the fourth bike, we have that the 3 bikes cost 110$ and the 4 bikes cost 130$. Hence it costs 20$ dollars to produce one more bike (from 3rd to 4th) and hence the marginal cost is 20$. Similarly for the 6th bike, we compare the cost of producing 5 bikes to the cost of producing 6 bikes and we get that the marginal cost is 50$. Applying the same methodology, the marginal cost for the 7th bike is 60$.

Answer 2

Marginal cost is termed as the cost of producing an additional quantity of goods and services. It refers to the change in the cost of total production due to the additional production of goods and services. The marginal cost is calculated by a change in cost is divided by a change in quantity.

The marginal cost of each quantity of bikes are:

The cost of production at 0 quantity bike is 0 and hence the marginal cost for 1st bike is 80$.  For the fourth bike, we have that the 3 bikes cost 110$ and the 4 bikes cost 130$. Hence it costs 20$ dollars to produce one more bike (from 3rd to 4th) and hence the marginal cost is 20$. Similarly,  for the 6th bike, we compare the cost of producing 5 bikes to the cost of producing 6 bikes and we get that the marginal cost is 50$. Applying the same methodology, the marginal cost for the 7th bike is 60$.

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