Suppose the fixed cost of building a nuclear power plant is $1 billion. Suppose also that the only variable cost is the labor of Homer Simpson, and he earns $10 per hour. If the plant generates 1,000 kilowatts each hour, and has already generated 1 billion kilowatts, what can you say about the marginal cost of the next kilowatt?
a. The marginal cost is equal to $10 .
b. The marginal cost is equal to $.01.
c. The marginal cost is equal to $1.01.
d. The marginal cost is rising.
e. The marginal cost is falling.
B
You might also like to view...
Which of the following rises during a recession?
A) Gross Domestic Product B) Investment C) Unemployment D) Consumption
A budget line represents all the combinations of two good a consumer can buy with a given amount of money and fixed prices for the goods
a. True b. False Indicate whether the statement is true or false
Suppose that changes in aggregate demand tended to be infrequent and that it takes a long time for the economy to return to long-run output. How would this affect the arguments of those who oppose using policy to stabilize output?
If the monopolist facing the demand curve P = 10 - Q is a perfectly discriminating monopolist and marginal cost is constant at $4, how much will the firm sell if it profit maximizes? 
A. 6 B. 4 C. 5 D. 10