Marginal cost is:
A)the cost per unit of output.
B)the increase in total cost from producing an additional unit of output.
C)the same thing as total variable cost.
D)is only relevant in the long-run.

Question

Quizplus · Accepted Answer

Marginal cost is the increase in total cost from producing an additional unit of output. It is calculated by dividing the change in total cost by the change in output. Marginal cost is the increase in total cost from producing one additional unit of output. It is different from the cost per unit of output, which is the average cost. Marginal cost is a short-run concept applicable to all types of costs, including variable and fixed costs. It is important for firms to consider marginal cost in their production decisions because it can help them determine the optimal level of output to produce.

Marginal Cost Is