Question

The extra cost associated with producing or consuming the next unit is called the:

A) Average Cost
B) Sunk Cost
C) Marginal Cost
D) Opportunity Cost

Answer 1

The extra cost associated with producing or consuming the next unit is called Marginal Cost.

Step-by-step explanation:

The extra cost associated with producing or consuming the next unit is called Marginal Cost. It represents the change in total cost when one additional unit is produced or consumed.

For example, if a bakery produces 50 loaves of bread at a total cost of $500, and then produces 51 loaves of bread at a total cost of $515, the marginal cost of the 51st loaf is $15.

Marginal cost is important for firms to consider because it helps determine the optimal level of production or consumption.