Which term refers to the additional cost incurred from producing one more unit of output?

• A. Total cost
• B. Fixed cost
• C. Marginal cost
• D. Average cost

Answer: (C)

Verified step by step guidance

1. Understand the concept of costs in production: Total cost is the sum of all costs incurred in production, including both fixed and variable costs.
2. Recognize that fixed costs are costs that do not change with the level of output, such as rent or salaries, and remain constant regardless of production quantity.
3. Identify that average cost is the total cost divided by the number of units produced, representing the cost per unit on average.
4. Focus on the term 'marginal cost,' which specifically refers to the additional cost incurred when producing one more unit of output.
5. Conclude that marginal cost is the correct term for the extra cost of producing an additional unit, distinguishing it from total, fixed, and average costs.