Question : "Marginal cost" equals:
Option 1: total cost minus total benefit for the last unit produced
Option 2: total cost divided by total benefit for the last unit produced
Option 3: total cost divided by quantity
Option 4: the change in total cost divided by the change in quantity
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Correct Answer: the change in total cost divided by the change in quantity
Solution : The correct answer is the change in total cost divided by the change in quantity .
The marginal cost is the difference in total production costs generated by developing or manufacturing one extra unit. To calculate the marginal cost, divide the change in production expenses by the change in quantity. The purpose of marginal cost analysis is to determine when a company may achieve economies of scale to optimise production and overall operations. If the marginal cost of producing one extra unit is less than the per-unit price, the producer may profit.
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