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JAMB Economics 2000 Question 19

Question 19

Theory of Costs and Revenue

If a total cost curve is plotted, marginal cost can be illustrated by the

  1. A.slope of the tangent to the curve at any given output
  2. B.U-shaped curve cutting the total cost curve at its lowest point
  3. C.straight line from the origin to the mid-point of the curve.
  4. D.straight line cutting the curve at its highest point.
Show the answer and explanation

Answer: A (slope of the tangent to the curve at any given output)

Explanation

Marginal cost is the extra cost of one more unit, i.e. how steeply total cost rises at that output: the slope of the tangent to the TC curve.