**Answer:**

$24 is the marginal cost of producing the third unit of output.

**Explanation:**

We know that the average variable cost of producing 3 units is 32, if we multiply 32 by 3 we get the total variable cost of producing 3 units. So 96 is the total variable cost of producing 3 units. Now we know that the marginal cost of producing the firs unit is 40 and the second unit is 32 so we can subtract (32+40) from 96 to find the marginal cost of the third unit.

96-(32+40)=24

**Answer:**

The answer is: 2) operate his business as long as he rents at least 1 boat per month.

**Explanation:**

Since Bill doesn't have any fixed costs, then he should continue to work as long as he can rent at least 1 boat per month. The break even point is calculated by dividing the total fixed costs over contribution margin per unit, but since the total fixed costs equal 0, then any boat rented will be over the break even point.

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