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Which of the following correctly defines marginal cost?

A. Marginal cost is the addition made to fixed cost when an extra unit is produced.

B. Marginal cost is the additional cost of producing an extra unit of output.

C. Marginal cost is the additional cost of increasing the scale of production in the long run.

D. Marginal cost is the difference between price and marginal revenue for the last unit sold.

E. Marginal cost is the same as the firm’s variable cost at all levels of output.

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Mahe Alam
Mahe AlamLv10
18 Jan 2021

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Related questions

33) For a single-price monopolist, marginal revenue falls faster than price (as output rises) because A) in order to sell additional units, the price must be lowered on all units. B) profits are maximized when marginal cost equals marginal revenue. C) the firm has no supply curve. D) the cost of producing extra units of output increases as production is increased. E) none of the above - marginal revenue does not fall faster than price.

Question:

Evaluate the following statement:

In the short-run, information about a perfectly competitive firm's fixed costs is needed to determine both the profit-maximizing level of output and the amount of profit earned when producing that level of output.

Answer:

The profit-maximizing level of output in a perfectly competitive market is determined at the level where marginal revenue (MR) equals marginal cost (MC). Marginal revenue is the additional revenue earned by selling an additional unit of output, while marginal cost is the additional cost of producing an additional unit of output (Farnham, 2014). Additionally, in order to find the amount of profit earned, we need to know the total cost and total revenue amounts. Total cost is the total of variable and fixed cost. Therefore, in short-run production, a firm's fixed cost is needed to determine both the profit-maximizing level of output and the amount of profit earned when producing that level of output.

Farnham, P (2014) Economics for Managers 3rd edition

~Beth

I need a peer reply for this, please.

(1) With a given plant size, an increase in output will NOT result in an increase in,
a. average variable cost
b.total cost
c.total fixed cost
d.average fixed costs

(2) The change in total variable cost which accompanies one extra unit of output
a.marginal cost
b.the average variable cost
c.the average total cost
d.the average fixed cost

(3) When the total product is rising,
a. variable cost must be declining
b. the marginal cost must be positive
c. the marginal product must be negative.

 d. fixed cost must be rising

(4) For a perfectly competitive firm,
a. price is less than marginal revenue
b.there is no relationship between price and marginal revenue
c. price is greater than marginal revenue
d.price equals marginal revenue










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