Practice Quiz

Praxis II Citizenship

Category - Economics

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What is the marginal cost?
  1. The total cost of production divided by the total units sold.
  2. The additional cost incurred to make one more unit than what has already been produced.
  3. The total cost of production divided by the total units made.
  4. The difference between the total cost of production for one unit and the total cost to the consumer for one unit.
Explanation
Answer: B - The marginal cost is the additional cost incurred to make one more unit than what has already been produced. For example, the Mallard Billmore duck call factory makes 100 duck calls for $250. They decide to make one extra duck call, and the land, labor, and capital required for the 101st duck call will cost $35. Therefore, the marginal cost at their current production rate is $35.
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