Multiple choice

A firm's average total cost is Rs. 300 at 5 units of output and Rs. 320 at 6 units of output. The marginal cost of producing the 6th unit is

  1. Rs. 20

  2. Rs. 120

  3. Rs. 320

  4. Rs. 420
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

First calculate total cost: TC = ATC × Q. At 5 units: TC5 = 300 × 5 = Rs. 1500. At 6 units: TC6 = 320 × 6 = Rs. 1920. Marginal cost of the 6th unit = TC6 - TC5 = 1920 - 1500 = Rs. 420. Option D is correct. Option A (Rs. 20) is the difference in average costs, not marginal cost. Option B (Rs. 120) and Option C (Rs. 320) are calculation errors.

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