Suppose the Fixed Cost of Building a Nuclear Power Plant

Multiple Choice

Suppose the fixed cost of building a nuclear power plant is $1 billion. Suppose also that the only variable cost is the labor of Homer Simpson, and he earns $10 per hour. If the plant generates 1,000 kilowatts each hour, and has already generated 1 billion kilowatts, what can you say about the marginal cost of the next kilowatt?

A) The marginal cost is falling.
B) The marginal cost is equal to $.01.
C) The marginal cost is equal to $1.01.
D) The marginal cost is rising.