Question

A firm's marginal cost of production is the?

1) change in total variable cost that results from producing each additional unit of output
2) change in total cost that results from producing each additional unit of output
3) change in total fixed cost that results from producing each additional unit of output
4) change in average total cost that results from producing each additional unit of output
5) change in average variable cost that results from producing each additional unit of output
6) change in average fixed cost that results from producing each additional unit of output

Answer 1

Marginal cost of production is the change in total cost that results from producing each additional unit of output. It is calculated by taking the change in total cost (or the change in variable cost) and dividing it by the change in output. Marginal costs are typically rising.

Step-by-step explanation:

Marginal cost of production is the change in total cost that results from producing each additional unit of output. It is calculated by taking the change in total cost (or the change in variable cost) and dividing it by the change in output. Marginal costs are typically rising, as additional units become more costly to produce. A firm can compare marginal cost to the additional revenue it gains from selling another unit to determine if the marginal unit is adding to profit.