TABLE 10.3 indoome e mse is sVID feo. IsniggsM bris poviu) 1207 ageisv Sam's Smoothies' Marginal Cost and Average Cost Marginal Average Average Average To produce 6 gallons of smoothies an Output Total cost cost fixed cost variable cost total cost hour, Sam's total cost is $56. Table (gallons (dollars (dollars 10.2 shows that this total cost is the per hour) per hour) per gallon) (dollars per gallon) sum of total fixed cost ($20) and total variable cost ($36). 20.00 12.00 Marginal cost is the increase in total 32.00 20.00 12.00 32.00 7.20 cost that results from a one-unit 2 39.20 10.00 9.60 19.60 increase in output. When Sam's 4.80 increases output from 5 gallons to 3 44.00 6.67 8.00 14.67 6 gallons an hour, total cost increases 4.20 from $51.80 to $56.00, an increase of 4 48.20 5.00 7.05 12.05 3.60 $4.20 a gallon. The marginal cost of 5 51.80 4.00 6.36 10.36 the sixth gallon an hour is $4.20. 4.20 Marginal cost is located midway 6 56.00 3.33 6.00 9.33 between the total costs to emphasize 4.80 7 60.80 2.86 5.83 8.69 that it is the result of changing output. 7.20 8 68.00 2.50 6.00 8.50 When Sam's produces 6 gallons an 12.00 hour, average fixed cost ($20 + 6 gal- 9 80.00 2.22 6.67 8.89 lons) is $3.33 a gallon; average vari- able cost ($36 + 6 gallons) is $6.00 a gallon; average total cost ($56 + 6 gal- lons) is $9.33 a gallon