Question

A company could produce 99 units of a good for $316 or produce 100 units of the same good for $332. The $16 difference in costs is:

a) The fixed cost
b) The marginal cost
c) The variable cost
d) The average cost

Answer 1

The $16 difference in costs between producing 99 units and 100 units of a good is the marginal cost.

Step-by-step explanation:

The $16 difference in costs between producing 99 units and 100 units of a good is the marginal cost.

Marginal cost is the additional cost of producing one more unit of output. It is not the cost per unit of all units produced, but only the next one. In this case, the cost increases by $16 to produce one additional unit, so the $16 difference is the marginal cost.