What are a pizza business's marginal costs for an output of 35 pizzas per day if it has the cost structure described below? The firm’s fixed costs are $20 per day. Output (pizzas per day) Total cost of output (fixed + variable) 0 $20 5 $80 10 $120 15 $150 20 $175 25 $195 30 $210 35 $230 40 $255 What are the firm’s marginal costs (MC) at an output of 35 pizzas?
In order to answer this question, we first have to understand what marginal cost is. In economics, marginal cost refers to how much a firm’s costs change when its output goes up. In other words, it is the cost of producing the next unit (or, in this case, five units) of output.
Because marginal cost has to do with how much the cost of production changes, we do not need to know how much the fixed costs are and how much the variable costs are. We only...
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