Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
The cost of producing one more unit of a good
B
The total cost of production
C
The fixed costs associated with production
D
The average cost of production
Understanding the Answer
Let's break down why this is correct
Answer
Marginal cost in economics is the extra cost that comes from producing one more unit of a good or service. It helps businesses understand how much more they will spend if they increase production. For example, if a factory makes 100 toys for $1,000 and then decides to make one more toy, the additional cost of that toy is the marginal cost. This concept is important because it helps companies decide whether it's worth it to produce more items based on how much they will earn from selling them. By knowing the marginal cost, businesses can make smarter choices about their production levels.
Detailed Explanation
Marginal cost is the extra cost of making one more item. Other options are incorrect because Total cost includes all costs, not just the extra for one more item; Fixed costs are the same no matter how much you produce.
Key Concepts
marginal cost
Topic
Understanding Marginal Costs
Difficulty
easy level question
Cognitive Level
understand
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