Suppose that when the level of output for the firm increases from 50 to 60 units, its variable costs increase from $500 to $700. What is the firm's marginal cost?
A) $5
B) $10
C) $20
D) $115

Question

Quizplus · Accepted Answer

Marginal cost is calculated as the change in total cost resulting from a one-unit change in output.

Using the given information: 
Change in output (ΔQ) = 60 - 50 = 10 units
Change in variable cost (ΔVC) = $700 - $500 = $200

Marginal cost = ΔVC / ΔQ = $200 / 10 = $20

Therefore, the firm's marginal cost is $20. Option C is the correct answer.

Suppose That When the Level of Output for the Firm