16. Remember that Jamie has to pay her workers $20 per hour. Suppose Jamie decides to purchase fire insurance which costs $87,600 for a year. (As it happens, this works out to be $10 per hour). The approximate marginal cost of the 52^nd unit of output now is:

   Clearly fire insurance is a fixed cost since the premiums don't increase with each new unit produced. As a fixed cost they have no effect whatsoever on marginal cost so, just as before, the marginal cost of the 52^nd unit of output is still $4.00.