Moving along a PPF, marginal cost is
A) the total cost, less the production of the other good or service.
B) equal to the opportunity cost of producing one more unit of a good or service.
C) greater than the opportunity cost.
D) the cost of producing the first unit of a good or service.

Question

Quizplus · Accepted Answer

Marginal cost is the added cost of producing one more unit of a good or service. It is equal to the opportunity cost of producing one more unit, which is the value of the next best alternative foregone. This is true when moving along a PPF, where resources are limited and the production of one good can only be increased by reducing the production of the other good. Marginal cost takes into account the diminishing marginal returns and increasing opportunity cost of production. Therefore, option B is the best choice.

Moving Along a PPF, Marginal Cost Is