Suppose that when the level of output for the firm increases from 100 to 110 units, its variable costs increase from $500 to $700. What is the firm's marginal cost?
A) $5
B) $7
C) $20
D) $200

Question

Quizplus · Accepted Answer

Marginal cost (MC) can be calculated by dividing the change in total variable cost (TVC) by the change in output (Q). 
MC = (TVC1-TVC0)/(Q1-Q0)
Here, TVC1=$700, TVC0=$500, Q1=110, Q0=100
MC= ($700-$500)/(110-100)
MC= $200/10= $20. 
So, the firm's marginal cost is $20 per unit.

Suppose That When the Level of Output for the Firm