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JAMB Economics 1984 Question 7

Question 7

Theory of Costs and Revenue

Quantity | Fixed Cost (N) | Variable Cost (N) | Total Cost (N) | Marginal Cost (N) | Average Cost (N)
1 | 750 | 200 | 950 | --- | 950
2 | 750 | 560 | 1310 | 360 | 655
3 | 750 | 900 | 1650 | ? | 550
The above table shows the short run costs of a firm. What is the firm's marginal cost for the third item produced?

  1. A.N350.00
  2. B.N340.00
  3. C.N360.00
  4. D.N370.00
  5. E.N505.00.
Show the answer and explanation

Answer: B (N340.00)

Explanation

MC of the 3rd item = TC(3) − TC(2) = 1650 − 1310 = N340 (or VC: 900 − 560 = 340).