Study the table below and answer the question.
| Output | TFC | TVC | TC |
| 0 | 20 | 0 | 20 |
| 1 | 20 | 10 | 30 |
| 2 | 20 | 18 | 38 |
| 3 | 20 | 24 | 44 |
| 4 | 20 | 29 | 49 |
| 5 | 20 | 33 | 53 |
| 6 | 20 | 39 | 59 |
What is the short run marginal cost (SMC) at 4 units of output?
Answer & explanation
Correct answer: option 2
The correct answer is option 2: 5
Step 1: Understanding Short-Run Marginal Cost (SMC)
Short-Run Marginal Cost (SMC) is calculated as: ΔTC/ ΔQ
where:
- ΔTC = Change in Total Cost
- ΔQ = Change in Output
Step 2: Extract Data from the Table
For Q = 4:
- TC (at Q = 4 )= 49
- TC (Q = 3) = 44
- Change in TC (ΔTC) = 49 - 44 = 5
- Change in Output (ΔQ) = 4 - 3 = 1
Step 3: Calculate SMC
SMC = 5/1 = 5
| Output | TFC | TVC | TC | AFC |
AVC |
SAC |
SMC |
| 0 | 20 | 0 | 20 | - | - | - | - |
| 1 | 20 | 10 | 30 | 20 | 10 | 30 | 10 |
| 2 | 20 | 18 | 38 | 10 | 9 | 19 | 8 |
| 3 | 20 | 24 | 44 | 6.67 | 8 | 14.67 | 6 |
| 4 | 20 | 29 | 49 | 5 | 7.25 | 12.25 | 5 |
| 5 | 20 | 33 | 53 | 4 | 6.6 | 10.6 | 4 |
| 6 | 20 | 39 | 59 | 3.33 | 6.5 | 9.83 | 6 |