Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
Marginal costs are always higher than variable costs
B
Marginal costs represent the change in total costs from producing one more unit, while variable costs change with production level
C
Marginal costs do not affect variable costs
D
Variable costs and marginal costs are the same
Understanding the Answer
Let's break down why this is correct
Answer
Marginal costs and variable costs are closely related concepts in production. Variable costs are the expenses that change depending on how much of a product is made, like materials and labor. Marginal cost, on the other hand, is the additional cost incurred when producing one more unit of that product. For example, if a factory makes 100 toys and the cost to make 100 is $1,000, but making 101 toys increases the total cost to $1,020, then the marginal cost of the 101st toy is $20. So, while variable costs cover the overall costs that vary with production levels, marginal costs focus specifically on the cost of producing one additional unit.
Detailed Explanation
Marginal costs show how much total costs go up when you make one more item. Other options are incorrect because Some might think marginal costs are always higher; It's a common mistake to think marginal costs don't affect variable costs.
Key Concepts
variable costs
Topic
Understanding Marginal Costs
Difficulty
easy level question
Cognitive Level
understand
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