Chapter 55, Problem 5MCQ

To determine

Marginal cost of the third unit of output

Explanation of Solution

Quantity	Variable cost	Total cost	Marginal cost
0	$0	$40
1	20	60	$20
2	50	90	30
3	90	130	40
4	140	180	50
5	200	240	60

The marginal cost at the third unit of output is $40.

Therefore, the correct option is a.

Economics Concept Introduction

Introduction:

Total cost is the sum of all costs or expenses that are incurred by a business firm while doing business activities.

Average total cost is determined by summing up the average variable cost and average fixed cost.

Marginal cost is the cost or expense that is occurred by using one additional unit of good. It is calculated by subtracting the previous total cost from the new total cost.