A company produces widgets at a cost of $100 for 10 widgets. If the cost to produce the 11th widget is $12, what is the marginal cost of producing the 11th widget?

Marginal cost is the extra cost of producing one more unit of a product. In this case, the company already spent $100 to produce 10 widgets, which means the average cost for those is $10 per widget. When they decide to produce the 11th widget, it costs an additional $12. Therefore, the marginal cost of producing the 11th widget is simply that extra $12, since it represents the cost incurred just for making that one additional item. This concept helps businesses understand how production decisions affect costs.