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28 July, 12:41

Your opportunity cost of cutting hair at your barbershop is $20 per hour. Electricity costs $6 per hour, and your weekly rent is $250. You normally stay open nine hours per day. What is the marginal cost of staying open for one more hour?

A) $276

B) $26

C) $250

D) $37

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  1. 28 July, 12:59
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    B) $26

    Explanation:

    Marginal Cost Formula:

    Marginal Cost = Change in total cost / Change in quantity

    Marginal Cost = (2070-1888) / 10-9

    Marginal Cost = 182/1

    Marginal Cost = $182

    Marginal Cost = 182/70 = $26/hour

    Working:

    9 hours a day

    Number of Hours worked during week = 9x7 = 63 hours

    Total Cost = ((20+6) x63) + 250 = $1,888

    10 hours a day

    Number of Hours worked during week = 10x7 = 70 hours

    Total Cost = ((20+6) x70) + 250 = $2,070
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