Which of the following best describes marginal resource cost?

• A. The total cost of all resources used in production
• B. The additional cost incurred by employing one more unit of a resource
• C. The average cost of resources per unit of output
• D. The additional revenue generated from selling one more unit of output

Answer: (B)

Verified step by step guidance

1. Understand the concept of marginal resource cost (MRC): it refers to the additional cost a firm incurs when it employs one more unit of a resource, such as labor or capital.
2. Recognize that total cost of all resources used in production is the sum of all resource expenses, not the incremental cost of one additional unit.
3. Distinguish marginal resource cost from average cost, which is the total cost divided by the number of units, rather than the cost of an additional unit.
4. Differentiate marginal resource cost from marginal revenue, which is the additional revenue from selling one more unit of output, not the cost of employing resources.
5. Conclude that marginal resource cost is best described as the additional cost incurred by employing one more unit of a resource.