The marginal cost of action choice X
A) Measures the additional cost of a small change in X
B) Tends to decrease as X increases
C) Measures the cost that a decision maker has already incurred by pursuing activity X
D) Is minimized at the best level of activity X

Question

Quizplus · Accepted Answer

Marginal cost refers to the additional cost incurred by producing one more unit of a good or service, or in this context, by a small change in the action choice X. It does not necessarily decrease as X increases (this depends on the cost structure of the activity), nor does it measure sunk costs (costs that have already been incurred and cannot be recovered), and it is not specifically about minimizing costs but rather about the incremental cost of increasing activity.

The Marginal Cost of Action Choice X