Consider a graph with a total variable cost curve.Cost is on the vertical axis and output on the horizontal axis.The marginal cost can be represented by:
A)a ray from the origin to a point tangent to the total variable cost curve.
B)a ray from the origin to a point on the total variable cost curve.
C)the slope at a particular point on the total variable cost curve.
D)the distance from the origin to a point on the total variable cost curve.

Question

Quizplus · Accepted Answer

Marginal cost is the change in total variable cost or the change in cost as output changes by one unit. Therefore, it is represented by the slope at a particular point on the total variable cost curve, which shows the change in cost per unit change in output. Option A is incorrect because a ray from the origin to a point tangent to the TVC curve represents average variable cost at that point, not marginal cost. Option B is incorrect because a ray from the origin to a point on the TVC curve represents total variable cost at that level of output but does not give any information about the change in cost for a change in output. Option D is incorrect because the distance from the origin to a point on the TVC curve is the total cost, not the marginal cost.

Consider a Graph with a Total Variable Cost Curve