Question

Hich of the following defines marginal cost? Select one:

a. It is the cost incurred in making an economic exchange.

b. It is the cost that is independent of the level of goods or services produced by the business.

c. It is the cost that has already been incurred and cannot be recovered.

d. It is the cost of an alternative that must be forgone in order to pursue a certain action.

e. It is the cost of producing an additional unit of output.

Answer 1

e. It is the cost of producing an additional unit of output.

Step-by-step explanation:

As you know there are a lot of types of costs during business activities like: fixed, variable, switching, opportunity and etc. However, the marginal cost is about the additional one. While the production process is going on, you need to obtain marginal revenue and consequently, you need to determine the marginal cost. Generally, it means the change of total production cost that appears from the one more additional unit production.

There is formula for marginal cost, but firstly we need to know the formula of Total Cost.

Total cost (TC)= Fixed cost(FC) + Variable cost(VC)

Average cost (AC)= Total Cost/ quantity

If we need to find Marginal Cost, it will equal to: MC=ΔTC/ΔQ or MC= DTC/DQ.

As you see we used the change in the quantity and Total cost for finding the additional unit cost and it means marginal cost.