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(5 points) Production . Beyonc uses equipment that she rents for $100 and ingredients that cost $8.35 a serving for the first 7 servings; for

  1. (5 points) Production. Beyonc uses equipment that she rents for $100 and ingredients that cost $8.35 a serving for the first 7 servings; for additional servings, she gets a discount and additional ingredients cost $7.99. (She does not get any discount on the first six servings!) (Note that she signed a lease and pays the rent regardless of how many dinners she serves; note that regardless of how much ingredients she buys for additional servings, she pays $8.35 for the ingredients for the first 7.) She hires workers at $20 each and finds that they produce servings according to the following schedule:

Dinners

Total Workers

1 0.20

2 0.43

3 0.69

4 1.00

5 1.35

6 1.75

7 2.21

8 2.75

9 3.36

10 4.06

11 4.87

12 5.80

13 6.87

14 8.10

(2 points) Calculate and graph the marginal cost of each serving. (Use a spreadsheet and show your calculations!) Why does the MC curve have the slope (up, down, or flat) that it does? What happens to the slope of the MC curve as Beyonce produces more and more servings? Why?

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