Define marginal cost and calculate Brazil's marginal cost of producing a ton of food when the quantity produced is 2.5 tons per day
What will be an ideal response?
The marginal cost of a good is the opportunity cost of producing one more unit of the good. When the quantity of food produced is 2.5 tons, the marginal cost of a ton of food is the opportunity cost of increasing the production of food from 2 tons per day to 3 tons per day. The production of ethanol falls from 54 barrels per day to 40 barrels per day, a decrease of 14 barrels per day. The opportunity cost of increasing food production is the decrease in ethanol product, so the opportunity cost of producing a ton of food when 2.5 tons of food per day are produced is 14 barrels of ethanol per day.
You might also like to view...
"Banks make a profit by paying depositors a high rate to attract funds and making loans at a low rate to encourage borrowing." Is the previous statement correct or not?
What will be an ideal response?
The above figure shows the market for labor. The employer is a monopsony. If the workers are unionized, the wage will be
A) $5 per hour. B) between $5 per hour and $15 per hour. C) above $15 per hour. D) less than if the workers were not unionized.