Marginal Cost

Which of the following best refers to the additional cost a person or firm incur to produce one more unit?

• Consumer Benefit

• Intersection

• Marginal Benefit

• Marginal Cost

You made a good decision if:

• Marginal cost is greater then marginal benefit

• Marginal cost is less than marginal benefit

• Marginal benefit is greater then marginal cost

• Marginal benefit is less then marginal cost

What is the technical term for the cost of producing 1 more unit in this context?

• Opportunity cost

• Marginal cost

• Variable cost

• Fixed cost

What is marginal cost?

• The change in total output that results from additional variable inputs.

• The change in total costs that result from additional units of outputs being produced.

• The upward sloping part of the marginal product curve.

• The benefit gained from the division of labour and specialisation.

Answer explanation

Marginal cost is the change in total costs that result from additional units of outputs being produced, making it the correct choice.

Adherence to the principle of marginal analysis entails continuing activities until the

• total benefit exceeds the marginal benefit

• total benefit equals the total cost

• total benefit exceeds the total cost

• marginal benefit equals the marginal cost

• marginal benefit exceeds the marginal cost

Using marginal analysis and the information in the table, how many pairs of socks should you buy?

• 1

• 2

• 3

• 4

Which of the following is an example of a marginal cost?

• The cost of raw materials for producing one additional unit.

• The total cost of production for all units.

• The average cost of production per unit.

• The fixed cost of setting up a factory.

• Produce more units.

• Stop production immediately.

• Reduce production.

• Maintain current production levels.

If the marginal benefit of consuming an additional unit of a good is less than the marginal cost, what should a rational consumer do?

• Consume more units.

• Stop consuming immediately.

• Reduce consumption.

• Maintain current consumption levels.

If a company decides to produce an additional unit of a product, what should it consider?

• The total cost of production.

• The marginal cost and marginal benefit of the additional unit.

• The fixed costs of production.

• The average cost of production.