In the short run, the marginal cost of the first unit of output is $20, the marginal cost of producing the second unit of output is $16, and the marginal cost of producing the third unit of output is $12. The firm's total variable cost of producing three units of output is
A) $12.
B) $16.
C) $20.
D) $48.

Question

Quizplus · Accepted Answer

The total variable cost is the sum of the marginal costs of each unit of output. Therefore, the total variable cost of producing three units of output is:

Total Variable Cost = Marginal Cost of Unit 1 + Marginal Cost of Unit 2 + Marginal Cost of Unit 3
Total Variable Cost = $20 + $16 + $12
Total Variable Cost = $48

Therefore, the correct answer is D) $48.

In the Short Run, the Marginal Cost of the First