Question

Which cost will increase or decrease with increase in production? A. Marginal cost B. FIxed cost C. Financial Cost D. All of the above

Answer 1

A

Step-by-step explanation:

The marginal cost is the change in total production cost that comes from making or producing one additional unit. To calculate marginal cost, divide the change in production costs by the change in quantity. The purpose of analyzing marginal cost is to determine at what point an organization can achieve economies of scale to optimize production and overall operations. If the marginal cost of producing one additional unit is lower than the per-unit price, the producer has the potential to gain a profit.

Answer B is not correct, so D is wrong, too.