Marginal cost
A) Is the change in total output from hiring one more factor of production.
B) Is the change in total cost from producing one additional unit of output.
C) Falls when there are diminishing returns.
D) Is the change in the total cost when hiring one more factor of production.

Question

Quizplus · Accepted Answer

Marginal cost is the change in total cost from producing one additional unit of output. It takes into account the variable costs, which vary with the level of production. It does not consider the fixed costs involved in the production process. As the output increases, the marginal cost initially decreases due to economies of scale, but eventually increases due to diminishing returns.

Marginal Cost