Which of the following best describe the term marginal cost or incremental cost.
A) Investigation of what happens to NPV when only one variable is changed.
B) The determination of what happens to NPV estimates when we ask what-if questions.
C) The degree to which a ﬁrm or project relies on ﬁxed costs.
D) The change in costs that occurs when there is a small change in output.
E) Taking into account the managerial options that are implicit in a project.

Question

Quizplus · Accepted Answer

Marginal cost or incremental cost refers to the change in costs that occurs when there is a small change in output. It is the cost of producing one additional unit of output.

Which of the Following Best Describe the Term Marginal Cost