Question

Owen runs a delivery business and currently employs three drivers. He owns three vans that employees use to make deliveries, but he is considering hiring a fourth driver. If he hires a fourth driver, he can schedule breaks and lunch hours so that all three vans are in constant use, allowing him to increase deliveries per day from 60 to 75. It will cost an additional $75 per day to hire the fourth driver. The marginal cost per delivery of increasing output beyond 60 deliveries per day:

Answer 1

Answer:

$5

Explanation:

Marginal cost also known as the incremental cost is defined as the incremental cost of producing an additional unit of a product or service , calculated by dividing the total increase in cost by increased number of goods produced.( change in cost /change in unit).

It is used to measure and evaluate an increase or decrease in the cost of production.

Workings

Additional cost - $75

Total increase in daily delivery = (75-60)=15

Marginal cost = 75/15 = %5