Your construction company has built 50 houses so far this ye

Your construction company has built 50 houses so far this year at a total cost to the company of $8 million. If the company builds a 51st house, its total cost will increase to $8.18 million. What is the marginal cost of the 51st house?

Solution

Ans:

Marginal cost is the additional cost incurred for producing one additional unit of a product or service.

Marginal cost of the 51st house = Total cost for 51 houses - Total cost for 50 houses.

= $8.18 million - $8 million

= $0.18 million.