Question

Marginal cost is calculated for a particular increase in output by A. multiplying the total cost by the change in output. B. dividing the change in total cost by the change in output. C. dividing the total cost by the change in output. D. multiplying the change in total cost by the change in output.

Answer 1

Dividing the change in total cost by change in output.

Step-by-step explanation:

Marginal cost of production can be defined as the change that occurs in total production cost that arises from the production of one additional unit of the product.

Marginal cost of production can also be described as the change in the opportunity cost that occurs when one additional unit of the product is produced.

Marginal cost production is an essential factor that should be put into consideration by an organization when measuring the different prices of products that is allocated to the consumers.

Marginal cost is calculated as:

Change in costs/ Change in quantity

Answer 2

B) dividing the change in total cost by the change in output

Step-by-step explanation:

Marginal cost(MC) is the cost incurred as a result of producing additional units of goods and services. It is calculated by dividing a change in total cost by a change in output.

That is,

Marginal cost(MC)= change in total cost(TC)/ change in output

Total cost(TC): This is the addition of fixed and variable cost in production.

Total cost(TC)= fixed cost (FC)+variable cost (VC)

Fixed cost (FC) are cost that doesn't change during the production process such as buildings, machineries and furniture.

Variable cost (VC) are cost that changes or are used up during production process such as raw materials.