Answer:
<u>The correct answer is C. four pies.</u>
Explanation:
<u>Marginal cost</u> is called the increase in the cost of production that is generated when the quantity produced in one unit increases. It should be remembered that the production cost refers to the money that must be disbursed to produce a service or a good. The aforementioned definition, indicates that the marginal cost is the increase in the cost recorded when an additional unit of a certain good is produced. <u>In other words, the marginal cost reflects the rate of variation of the cost divided by the change in the level of production.</u>
<u>The curve representing the evolution of marginal cost has the shape of a concave parabola, due to the law of diminishing returns.</u>
In the graph, the marginal cost curve has the following values:
- For one pie, it's $ 1.00
- For two pies, the curve decreases and it's $ 0.60
- For three pies, the curve keeps decreasing and it's $ 0.30
- For four pies, the curve begins to increase and it's $0.60
- For five pies, the curve continue increasing and it's $ 1.40
