An additional cost from selecting a certain course of action is known as a(n):

• A. sunk cost
• B. average cost
• C. fixed cost
• D. marginal cost

Answer: (D)

Verified step by step guidance

1. Understand the definition of each cost term: A sunk cost is a cost that has already been incurred and cannot be recovered; average cost is the total cost divided by the quantity produced; fixed cost is a cost that does not change with the level of output; marginal cost is the additional cost incurred from producing one more unit or selecting a certain course of action.
2. Identify the key phrase in the problem: 'An additional cost from selecting a certain course of action' implies we are looking for the cost that changes when a decision is made to increase or change output or action.
3. Recall that marginal cost measures the change in total cost resulting from a one-unit increase in output or from choosing a particular action, which aligns with the problem's description of an 'additional cost.'
4. Compare the definitions to eliminate incorrect options: sunk cost is irrelevant because it is past and unrecoverable; average cost is an average measure, not an additional one; fixed cost does not change with output, so it cannot be the additional cost.
5. Conclude that the correct term for an additional cost from selecting a certain course of action is marginal cost, as it directly measures the incremental change in cost.