A bakery is considering whether or not to hire an extra baker for the night shift. If that baker would earn $20 per hour, work an 8-hour shift, and produce 100 pastries that would sell for $3 each, the marginal cost of producing an additional pastry is _____.

Accepted Solution

Answer: The Marginal Cost of the new baker is $1.60. Step-by-step explanation: Consider the provided information. Baker would earn $20 per hour, that means Baker Wage = $20 per hour Baker will work for 8 hours So the total money baker will earn is: Total cost = 8 × 20 = $160 Baker produce 100 pastries. That means the quantity is 100. [tex]\text{Marginal Cost}=\frac{\triangle TC}{\triangle Q}[/tex] Where ΔTC is the total cost and ΔQ is the quantity. Substitute the respective values in the above formula. [tex]\frac{160}{100}=1.6[/tex] Hence, the Marginal Cost of the new baker is $1.60.