Answer the question on the basis of the following cost data. output average fixed cost average variable cost 1 $50.00 $100.00 2 25.00 80.00 3 16.67 66.67 4 12.50 65.00 5 10.00 68.00 6 8.37 73.33 7 7.14 80.00 8 6.25 87.50 the marginal cost of the fifth unit of output is

The correct answer is "$3"

Explanation:

Output     Average Fixed Cost    Average Variable Cost

1                    $50.00                                      $100.00  

 2                      25.00                                         80.00  

3                         16.67                                       66.67  

4                     12.50                                           65.00  

5                       10.00                                         68.00  

6                        8.37                                            73.33  

7                        7.14                                            80.00  

8                      6.25                                             87.50  

The marginal cost of the fifth unit of output is $68 - $65 = $3.

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