Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
The marginal cost is $0.50, indicating a small increase in production cost, which suggests they should increase production.
B
The marginal cost is $3.50, showing that increasing production is too costly and they should maintain current levels.
C
The marginal cost is $3, meaning the bakery should not produce more since their cost remains the same.
D
The marginal cost is irrelevant as they should focus on the total production cost only.
Understanding the Answer
Let's break down why this is correct
Answer
The marginal cost is the cost of producing one additional unit of a product, in this case, one more loaf of bread. For the bakery, the cost to produce the first 50 loaves is $3 each, but the 51st loaf costs $3. 50 to make. Therefore, the marginal cost of producing that additional loaf is $3. 50.
Detailed Explanation
The marginal cost is the extra cost of making one more loaf. Other options are incorrect because This answer confuses total cost with marginal cost; This answer assumes the cost stays the same for all loaves.
Key Concepts
Marginal Costs
Production Decisions
Cost Management
Topic
Calculating Marginal Costs
Difficulty
easy level question
Cognitive Level
understand
Ready to Master More Topics?
Join thousands of students using Seekh's interactive learning platform to excel in their studies with personalized practice and detailed explanations.