Question

A pizzeria's cost of plant is $700, its cost of labor is $340 per worker, and its cost of the pizza ingredients is $6 per pie. When the pizzeria employs 4 workers, it produces 330 pizzas, and when it employs 5 workers, it produces 400 pizzas. When the pizzeria increases its output from 330 to 400 pizzas, what is its marginal cost per pizza? Question 12 options: $6.00 $12.67 $4.86 $10.86 ...

Answer 1

Answer :

$10.86

Explanation :

Marginal cost =change in total cost /change in quantity

=(4800-4040)/(400-330)

=760/70

=10.86.

Total cost when produce 330 pizza.

Fixed cost =700 for cost plant. It will same at every level of output.

Labor cost =labor *labor cost per labor.

=4*340

=1360.

Ingredient cost =pizza *per pie ingredients

=330*6

=1980.

Total cost =700+1360+1980=4040.

Total cost when produce 400 pizza.

Fixed cost =700 for cost plant. It will same at every level of output.

Labor cost =labor *labor cost per labor.

=5*340

=1700.

Ingredient cost =pizza *per pie ingredients

=400*6

=2400

Total cost =700+1700+2400=4800.