Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
The additional cost of producing one more unit of a good
B
The total cost of production divided by the number of units produced
C
The fixed costs associated with production
D
The opportunity cost of choosing one production method over another
Understanding the Answer
Let's break down why this is correct
Answer
Marginal cost in the short run refers to the additional cost of producing one more unit of a good or service when some resources are fixed. In the short run, businesses cannot change everything, like their factory size, but they can adjust things like labor or materials. For example, if a bakery usually makes 100 loaves of bread and decides to bake one more loaf, the marginal cost is the extra ingredients and labor needed for that one loaf. Understanding marginal cost helps businesses decide whether it is worth producing more items based on how much extra money they will make compared to the extra costs. This way, they can make smarter choices about production and pricing.
Detailed Explanation
Marginal cost is the extra cost to make one more item. Other options are incorrect because This option talks about average cost, not extra cost; Fixed costs are costs that don't change, like rent.
Key Concepts
short-run costs
Topic
Understanding Marginal Costs
Difficulty
easy level question
Cognitive Level
understand
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