AP Microeconomics · Past multiple choice · Question 20, older AP Economics course description · Four-function calculator
Marginal cost of the fourth unit
A table lists a firm's total cost at outputs from 0 to 6. Compute the extra cost of the fourth unit.
The lesson this question tests
1 Read the question
The question is College Board's: sample question 20 in AP Economics Course Description. It starts on page 22 of the PDF. College Board no longer posts this edition, so it opens from the copy the Internet Archive saved on June 3, 2016. A four-function calculator is allowed, as on the exam.
Open Question 20 (PDF, page 22)
2 Pick your answer
3 Check the explanation
Why the answer is A open once you have picked
Marginal cost is the change in total cost from making one more unit. The fourth unit is the step from 3 units to 4 units of output.
Total cost at 4 units is $32 and at 3 units is $28, so the marginal cost of the fourth unit is 32 - 28 = $4.
The table gives total cost at every output, so nothing else is needed.
Each choice
- A (correct). Subtract total cost at 3 units from total cost at 4 units: $32 - $28.
- B. This is the step from 4 units to 5, $43 - $32, which is the marginal cost of the fifth unit. Lining up the wrong pair of rows is an easy slip.
- C. This subtracts the fixed cost, $13, from total cost at 4 units, which gives total variable cost of 4 units, not the cost of the fourth unit alone.
- D. This is total cost at 4 units. Marginal cost is the change from one unit to the next, not the running total.
- E. Total cost at both 3 and 4 units is in the table, and that is all marginal cost needs.
Question and answer key: College Board, from the Internet Archive. The title and summary are ours, and so is the explanation.