You rent a car for $29.85. The first 140 miles are free, but each mile thereafter costs $0.12. You plan to drive it 165 miles. What is the marginal cost of driving the car?

A - The marginal cost is whatever can be purchased with $29.85 plus $16.56.

B - The marginal cost is $29.85.

C - The marginal cost is $3.00 plus the cost of gas.

D - The marginal cost is the cost of gas plus the initial payment plus some additional payment.

Question

Mathematics

Monica

Today, 14:41

You rent a car for $29.85. The first 140 miles are free, but each mile thereafter costs $0.12. You plan to drive it 165 miles. What is the marginal cost of driving the car?

A - The marginal cost is whatever can be purchased with $29.85 plus $16.56.

B - The marginal cost is $29.85.

C - The marginal cost is $3.00 plus the cost of gas.

D - The marginal cost is the cost of gas plus the initial payment plus some additional payment.

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Answers (1)

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Jewel Bond · Answer 1

The marginal costs are 16 cents per mile for miles above 160 plus the cost of gas. Therefore the marginal cost is $9.60 plus the cost of gas. The initial payment can be forgotten because it is a sunk cost; it is not part of marginal costs.