The sum of costs necessary to effect a one-unit increase in the activity level is a(n):
A)Differential cost.
B)Opportunity cost.
C)Marginal cost.
D)Sunk cost.
E)None of the answers is correct.

Question

Quizplus · Accepted Answer

The sum of costs necessary to effect a one-unit increase in activity level is known as the marginal cost. Marginal cost represents the change in total cost that arises when the quantity produced changes by one unit. It helps managers to make informed decisions about whether to increase or decrease production, by comparing the marginal cost with revenue generated by selling the additional unit.

The Sum of Costs Necessary to Effect a One-Unit Increase