Question

What is the total cost of production associated with the 3rd raincoat?

Option 1: Variable Cost
Option 2: Fixed Cost
Option 3: Average Total Cost
Option 4: Marginal Cost

Answer 1

The total cost of production associated with the 3rd raincoat is represented by the marginal cost, which includes both fixed and variable costs.

Step-by-step explanation:

In production, the total cost of producing a specific unit, such as the 3rd raincoat, can be broken down into different types of costs. The cost that measures the total cost of producing a specific unit is called the marginal cost. Marginal cost is the additional cost incurred to produce one more unit. It takes into account both fixed costs and variable costs.

Fixed costs are costs that do not change with the level of production, such as rent or salary. Variable costs, on the other hand, change with the level of production, such as raw materials or labor. The marginal cost includes both the additional variable costs and a portion of the fixed costs. Therefore, the total cost of production associated with the 3rd raincoat would be represented by the marginal cost.