ECONOMICS
COMPETITION AND MARKET STRUCTURES
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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When a company produces one extra unit, their total cost increases from $7, 500 to $8, 000. What is the marginal cost of producing that extra unit?
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$500
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$8, 000
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$7, 500
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$250
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Explanation:
Detailed explanation-1: -Therefore, Marginal cost = ($6, 000 – $5, 000) / (1, 500 – 1, 000) Marginal cost = $1, 000 / 500. Marginal cost = $2 which means the marginal cost of increasing the output by one unit is $2.
Detailed explanation-2: -Marginal Cost = Change in Total Cost / Change in Quantity Change in Quantity = Total quantity product including additional unit – Total quantity product of normal unit.
Detailed explanation-3: -The addition to total cost by producing an additional unit of output by a firm is called marginal cost.
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