Marginal cost is defined as the change in total cost that arises when the quantity produced is incremented by one unit. It is calculated by dividing the change in total cost by the change in quantity (output), making option A correct. Options B and C describe incorrect calculations and characteristics of marginal cost.

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Marginal Cost

Question 122

Multiple Choice

Marginal cost:

A) is calculated as the change in total cost divided by the change in total output.
B) is calculated as the change in total output divided by the change in total cost.
C) increases then decreases, as output increases, to reflect marginal product.
D) All of these are correct.

Correct Answer: