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“Marginal Cost” equals
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- total cost minus total benefit for the last unit produced
- total cost divided by total benefit for the last unit produced
- total cost divided by quantity
- the change in total cost divided by the change in quantity
- total cost minus total benefit for the last unit produced
Correct Option: D
Marginal cost is the change in the total cost that arises when the quantity produced has an increment by unity. That is, it is the cost of producing one more unit of a good. To illustrate marginal cost let’s assume that the total cost of producing 10,000 units is Rs. 50,000. If we produce a total of 10,001 units the total cost is Rs. 50,002. That would mean the marginal cost—the cost of producing the next unit—was Rs. 2.
