A firm estimates that when output is 10, its total costs are $900. It also finds that when output is 11, its total costs are $920. The marginal cost of the eleventh unit of output is:

Question

Quizplus · Accepted Answer

Marginal cost is the change in total cost resulting from a one-unit change in output. In this case, the change in output is from 10 to 11, and the change in total cost is from $900 to $920.

Marginal cost = Change in total cost / Change in output 
Marginal cost = ($920 - $900) / (11 - 10) 
Marginal cost = $20

Therefore, the marginal cost of the eleventh unit of output is $20.

A Firm Estimates That When Output Is 10, Its Total