Question

In the short run, the marginal cost of the first unit of output is $20, the marginal cost of producing the second unit of output is $16, and the marginal cost of producing the third unit of output is $12. The firm's total variable cost of producing three units of output is

A) $12.
B) $16.
C) $20.
D) $48

Answer 1

Answer: $48

Explanation: Marginal cost is the change in total cost when one more unit of output is produced.

Variable cost is that portion of total cost that changes with the level of output.

so, we can say that :-

variable cost = marginal cost of 1st unit + marginal cost of 2nd unit +

marginal cost of 3rd unit

= $20 + $16 + $12

= $48