Question

1. Marginal cost is defined as

a. a change in total costs from producing one more unit of output.

b. the change in fixed cost from producing one more unit of output.

c. total cost divided by total output.

d. total variable cost divided by total output.

 

2. The marginal cost curve often decreases at first and then starts to increase. This is explained by:

a. the law of diminishing returns.

b. economies of scale.

c. increasing ATC.

 

3. From the information given in the following table, calculate the marginal cost of the 3rd unit of output. Enter your answer exactly; do not round.

Output	Total Cost	Marginal Cost
0	$20	N/A
1	$35	$15
2	$45	$10
3	$65
4	$90	$25