Which of the following correctly defines marginal cost?
A) Marginal cost is the addition made to fixed cost when an extra unit is produced.
B) Marginal cost is the additional cost of producing an extra unit of output.
C) Marginal cost is the additional cost of increasing the scale of production in the long run.
D) Marginal cost is the difference between price and marginal revenue for the last unit sold.
E) Marginal cost is the same as the firm's variable cost at all levels of output.

Question

Quizplus · Accepted Answer

Marginal cost is the additional cost incurred in producing one more unit of output. It includes both variable costs (such as labor and materials) and any additional fixed costs (such as rent for a larger factory). Marginal cost is important because it helps firms determine how much output to produce in order to maximize profits.

Which of the Following Correctly Defines Marginal Cost