According to the chart, what is the marginal cost of producing the second pie?

• A. The total cost of producing two pies divided by two.
• B. The additional cost incurred when production increases from one to two pies.
• C. The average cost of producing the first and second pies.
• D. The difference between the fixed cost and the variable cost for two pies.

Answer: (B)

Verified step by step guidance

1. Understand the definition of marginal cost: it is the additional cost incurred when production increases by one unit. In this case, from producing one pie to producing two pies.
2. Identify the total cost of producing one pie and the total cost of producing two pies from the chart or data provided.
3. Calculate the change in total cost when production increases from one pie to two pies by subtracting the total cost of one pie from the total cost of two pies. Mathematically, this is: \(\text{Marginal Cost} = TC_2 - TC_1\) where \(TC_2\) is total cost for two pies and \(TC_1\) is total cost for one pie.
4. Avoid confusing marginal cost with average cost or fixed and variable costs. Marginal cost focuses only on the additional cost of producing the next unit, not averages or cost components.
5. Use the calculated marginal cost to answer the question about the cost of producing the second pie, confirming it represents the additional cost incurred when increasing production from one to two pies.