If a company calculates its marginal cost to be $4 when producing the third unit, it indicates that the total cost of producing three units is $12.

Marginal cost refers to the extra cost of producing one more unit of a product. If a company finds that the marginal cost of producing the third unit is $4, it means that when they add this third unit, it costs them an additional $4. To find the total cost of producing three units, we can think about the costs of the first and second units as well. If the first two units cost a total of $8, then adding the third unit for $4 brings the total to $12. This shows how understanding marginal costs helps businesses see how production affects their overall expenses.