Question

Marginal cost is equal to A. change in total variable cost divided by change in output. B. change in total cost divided by change in output. C. total variable cost divided by quantity of output. D. Both A and B are correct.

Answer 1

Answer:

D

Explanation:

If the cost function C is continuous and differentiable, the marginal cost  MC is the first derivative of the cost function with respect to the output quantity Q:

MC(Q)= dC/ dQ.

The marginal cost can be a function of quantity if the cost function is non-linear. If the cost function is not differentiable, the marginal cost can be expressed as follows:

MC=^C/^Q

where ^  denotes an incremental change of one unit.

Answer 2

Answer:

Option "B" is correct.

Explanation:

It is the change in total cost, not total variable cost over the output. Thank you.