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What is the best definition of marginal cost

A:the possible income from producing an additional item
B:the price of producing one additional unit of a good
C:the additional income gained from selling an sitio al good
D:the financial gain from business activity minus expenses

1 Answer

3 votes

Marginal Cost is the variation (increase or decrease) of the costs of a production run when is increased by one additional unit of any given item, and it is calculated when the breakeven point has already been already reached.

Its usage is crucial for companies because it allows them to set a parameter that defines its optimum production quantity (also known as the "sweet spot") in which, if they operate within, it can maximize its profits.

Therefore, the answer is B: The price of producing one additional unit of a good.

User Muhammad Maqsood
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