Which of the following best defines marginal cost?

• A. The increase in total cost that results from producing one additional unit of output.
• B. The cost of all inputs used in production.
• C. The total cost divided by the number of units produced.
• D. The difference between total revenue and total cost.

Answer: (A)

Verified step by step guidance

1. Understand that marginal cost (MC) measures how total cost changes when output changes by one unit.
2. Recall the formula for marginal cost: \( MC = \frac{\Delta TC}{\Delta Q} \), where \(\Delta TC\) is the change in total cost and \(\Delta Q\) is the change in quantity produced.
3. Recognize that marginal cost specifically focuses on the additional cost incurred from producing one more unit, not the total cost or average cost.
4. Compare the given options to the definition: the correct one should describe the increase in total cost from producing one additional unit.
5. Conclude that the best definition of marginal cost is 'The increase in total cost that results from producing one additional unit of output.'