Question 15
Theory of Costs and RevenueWhich of the following explains marginal cost?
- A.Overhead costs plus variable costs resulting from production
- B.The average cost of producing more units of the product
- C.The extra cost of producing more units of the product
- D.Overhead cost minus variable costs
- E.The addition to total cost resulting from the production of an additional unit
Show the answer and explanation
Answer: E (The addition to total cost resulting from the production of an additional unit)
Explanation
Marginal cost is the change in total cost when one more unit is produced.