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16 August, 16:12

Tony is the owner of Tony's Taqueria. Tony is a profit-maximizing owner whose firm operates in a competitive market. An additional worker costs Tony $200 and has a marginal productivity of 40 tacos. Assuming no other variable costs, what is the marginal cost of a taco? a. $200 b. $8 c. $5 d. There is insufficient information available to answer this question.

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  1. 16 August, 18:26
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    (c) $5

    Explanation:

    Remember, To calculate marginal cost, we divide the change in production costs by the change in quantity.

    In this example, the change in production cost is $200 (for hiring an additional worker) while the change in quantity of taco is 40 (increase in marginal productivity).

    The marginal cost = $200/40

    we get $5 as the marginal cost.
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