Refer to the table below. The total cost of producing 199 pizzas is \$1,000, and the total cost of producing 200 pizzas is \$1,005. What is the marginal cost of producing the 200th pizza?

• A. \$2.50
• B. \$1,000
• C. \$1,005
• D. \$5

Answer: (D)

Verified step by step guidance

1. Understand that marginal cost (MC) is the additional cost incurred by producing one more unit of output. In this case, it is the cost of producing the 200th pizza compared to the 199th pizza.
2. Identify the total cost (TC) of producing 199 pizzas, which is given as \$1,000, and the total cost of producing 200 pizzas, which is \$1,005.
3. Calculate the change in total cost by subtracting the total cost of 199 pizzas from the total cost of 200 pizzas: \(\Delta TC = TC_{200} - TC_{199}\).
4. Calculate the change in quantity produced, which is \(\Delta Q = 200 - 199 = 1\) pizza.
5. Use the marginal cost formula: \(MC = \frac{\Delta TC}{\Delta Q}\). Substitute the values to find the marginal cost of producing the 200th pizza.