The firm increased production by 5 units and the total variable cost increased from $3,000 to $4,500. What is the marginal cost associated with this increase in production?
A) $300
B) $500
C) $1,500
D) $4,500

Question

Quizplus · Accepted Answer

Marginal cost is the change in total variable cost divided by the change in quantity produced. In this case, the change in total variable cost is $4,500 - $3,000 = $1,500, and the change in quantity produced is 5 units. Therefore, the marginal cost is $1,500 / 5 = $300.

The Firm Increased Production by 5 Units and the Total