Question

The graph is a marginal cost curve that compares expenses for producing apple pies. According to the graph, the marginal cost begins to increase when the producer makes two pies. three pies. four pies. five pies.

Answer 1

The correct answer is C. Four pies

Explanation:

Marginal cost refers to an increase in the cost of production as additional units are made. In the case of apple pies, the graph shows the cost for one is $1.00. Moreover, this decreases when two or three pies are produced because the cost is between $0.60 and $0.30. However, if the producer makes four or more units, the cost increases. For example, at four units the cost per unit is $0.60, while at six units the cost is $1.50. Thus, the marginal cost begins to increase at four pies.