WBCS.LIVE practice question

In microeconomic production theory, marginal cost is strictly defined as what?

Solve this multiple-choice question and check the correct answer with its explanation below.

Answer options

  1. The change in total cost resulting from producing one additional unit.
  2. The total fixed cost divided by the quantity produced.
  3. The total variable cost divided by the quantity produced.
  4. The revenue generated from selling one additional unit.

Correct answer and explanation

Correct answer: The change in total cost resulting from producing one additional unit.

Explanation: āœ… Correct Answer: A) The change in total cost resulting from producing one additional unit. šŸ“š Explanation: In microeconomics, marginal cost is defined as the change in total production cost that comes from making or producing one additional unit of a good. It is calculated by dividing the change in total cost by the change in total quantity produced. Businesses heavily utilize marginal cost analysis to determine the optimal production volume where they can maximize their overall profits.