Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
The total cost of production divided by the number of units produced
B
The cost of producing one additional unit of a good or service
C
The fixed cost associated with producing a good or service
D
The average cost of production over a specific period
Understanding the Answer
Let's break down why this is correct
Answer
Marginal cost in economics refers to the additional cost of producing one more unit of a good or service. It helps businesses understand how much extra they need to spend when they increase production. For example, if a factory currently makes 100 toys and it costs $1,000 to produce them, but making one more toy increases the total cost to $1,005, the marginal cost of that additional toy is $5. Understanding marginal cost is important because it helps companies decide whether it is worth it to produce more items based on potential sales. By comparing marginal cost to the price they can sell the extra product for, businesses can make better choices about their production levels.
Detailed Explanation
Marginal cost is the extra cost of making one more item. Other options are incorrect because This option talks about total costs, not just the extra cost; Fixed costs are costs that don't change, like rent.
Key Concepts
Marginal cost
Topic
Marginal Analysis in Economics
Difficulty
easy level question
Cognitive Level
understand
Ready to Master More Topics?
Join thousands of students using Seekh's interactive learning platform to excel in their studies with personalized practice and detailed explanations.