Final answer:
The marginal cost of producing an additional unit when the total cost increases from $300 to $700 is $400. Marginal cost represents the cost of producing one more unit and is found by dividing the change in total cost by the change in output quantity.
Step-by-step explanation:
If the total cost rises from $300 to $700 when one additional unit of output is produced, the marginal cost is calculated by subtracting the initial cost from the final cost and then dividing the difference by the change in units of output. Since the cost increases by $400 ($700 - $300) and the increase in output is one unit, the marginal cost would be:
$400 / 1 unit = $400 per unit.
Therefore, the marginal cost of producing an additional unit is $400. Marginal cost is a vital concept in economics and business that represents the additional cost incurred when producing one more unit of a good or service. It is not the average cost of all units produced, but rather the cost of producing the next unit (or a few additional units). To find marginal cost, we take the change in total cost and divide it by the change in quantity.
As demonstrated in Table 9.3, when output increases from 1 to 2 units and total cost increases accordingly, the marginal cost of the second unit is found by calculating the difference in total costs and dividing it by the increase in quantity. This example shows that the marginal cost for each unit can vary depending on production levels and costs. Moreover, the marginal cost curve is typically upward-sloping due to diminishing marginal returns, which means that producing additional units can become more costly.