Question

Marginal cost A) is the increase in total cost resulting from producing one more unit. B) is the average cost of production divided by output. C) equals the increase in AVC resulting from producing one more unit. D) always equals average cost.

Answer 1

Answer: A) is the increase in total cost resulting from producing one more unit.

Explanation:

Marginal cost is the increase in total cost that a company incurs from producing one more unit of the good being produced. It includes both fixed and variable cost and can be calculated by dividing the change in cost by the change in quantity.

Marginal cost is an important metric in profit maximisation because it tells the point where profit is maximised when it equals Marginal revenue.