A firm's MC curve:
A)is essentially its TC curve scaled for its fractional share of the market
B)shows the addition to total cost needed to produce each additional unit of output.
C)is its unit cost of output, TC/q.
D)is approximately equal to all the above.
E)is defined by none of the above.

Question

Quizplus · Accepted Answer

The marginal cost (MC) curve shows the additional cost incurred by a firm to produce an extra unit of output. Hence, it depicts the change in total cost (TC) due to the production of an additional unit of output. As a result, it is essentially a derivative of the TC function with respect to the quantity of output. Therefore, option B is the correct answer. Option A is incorrect because the fractional share of the market does not influence the MC. Option C is inaccurate because MC and unit cost are not the same things. Finally, option D is incorrect because only option B is true.

A Firm's MC Curve