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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 52nd 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 52nd unit of output is still $4.00.
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| Workers | Q | MC |
| 1 | 10 | 2.00 |
| 2 | 22 | 1.82 |
| 3 | 31 | 2.22 |
| 4 | 40 | 2.22 |
| 5 | 47 | 2.86 |
| 6 | 52 | 4.00 |
| 7 | 56 | 5.00 |
| 8 | 58 | 10.00 |
| 9 | 60 | 10.00 |
| 10 | 61 | 20.00 |
|
