Multiple choice

Marginal cost is the

  1. Cost of producing a unit of output

  2. Cost of producing an extra unit of output

  3. Cost of producing the total output

  4. Cost of producing a given level of output
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B Correct answer
Explanation

Marginal cost is the additional cost incurred when producing one more unit of output. It is calculated as the change in total cost divided by the change in quantity. This is distinct from average cost (cost per unit) or total cost (cost of all units produced).

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