Exhibit 7-10 Short-run cost schedule for book publisher's hourly production
TotalOutput
TotalVariable Cost
TotalCost
0 cases of books
$ 0
$200
1
100
300
2
150
350
3
250
450
4
450
650
In Exhibit 7-10, the marginal cost of increasing production from 2 to 3 cases of books is:
A. higher than the marginal cost of increasing production from 1 to 2 cases of books, so the marginal cost curve must be rising in between 2 and 3 cases.
B. higher than the marginal cost of increasing production from 1 to 2 cases of books, so the average total cost must be rising in between 2 and 3 cases.
C. lower than the marginal cost of increasing production from 1 to 2 cases of books, so the marginal cost must be greater than average total cost between 2 and 3 cases.
D. lower than the marginal cost of increasing production from 1 to 2 cases of books, so the average total cost must be rising in between 2 and 3 cases.
Answer: A
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