Which expression defines marginal cost (MC)?

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Prepare for the OnRamps Economics College Exam with detailed multiple-choice questions and explanations. Strengthen your understanding and boost your performance!

Multiple Choice

Which expression defines marginal cost (MC)?

Explanation:
Marginal cost is the cost of producing one more unit. It corresponds to the slope of the total cost curve: how much total cost changes when output changes by a small amount. So the correct expression is the change in total cost divided by the change in output, ΔTC/ΔOutput. For example, if increasing output from 100 to 101 units raises total cost from 500 to 505 dollars, the marginal cost is (505 − 500) / (101 − 100) = 5 dollars per additional unit. The other forms don’t capture that idea: using change in variable cost in the denominator ties the measure to variable cost rather than total output, the reciprocal would give units per dollar rather than dollars per unit, and using total revenue would reference revenue, not cost.

Marginal cost is the cost of producing one more unit. It corresponds to the slope of the total cost curve: how much total cost changes when output changes by a small amount. So the correct expression is the change in total cost divided by the change in output, ΔTC/ΔOutput.

For example, if increasing output from 100 to 101 units raises total cost from 500 to 505 dollars, the marginal cost is (505 − 500) / (101 − 100) = 5 dollars per additional unit.

The other forms don’t capture that idea: using change in variable cost in the denominator ties the measure to variable cost rather than total output, the reciprocal would give units per dollar rather than dollars per unit, and using total revenue would reference revenue, not cost.

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