Question

A manufacturer produces 1,000 basketballs each day, which it sells to customers for $30 each. All costs associated with production and sales total $10,000; however, if the manufacturer were to produce one additional basketball per day, total costs would increase to $10,100. From these amounts, we can tell that:________
a. the firm has negative profit.
b. marginal cost equals $100.
c. marginal cost equals $150.
d. marginal cost equals marginal revenue.

Answer 1

Answer:

b. marginal cost equals $100.

Explanation:

Marginal Cost is the cost of one extra unit produced.

Marginal Cost = $10,100 - $10,000 = $100

Marginal revenue is revenue earned per extra j

Unit sold. Marginal revenue equals price. $30

Marginal cost is greater than marginal revenue

Profit = Total revenue - Total cost = (1,000 × $30) - $10,000 = $20,000

Profit is positive

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