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Marginal Cost quiz #1 Flashcards

Marginal Cost quiz #1
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  • How is marginal cost (MC) calculated?
    Marginal cost is calculated as the change in total cost divided by the change in quantity produced (MC = ΔTC / ΔQ).
  • What is the term for the extra cost of producing one more unit of output?
    The term is marginal cost.
  • Explain the concept of marginal cost. How does it relate to total cost, and how is it found?
    Marginal cost is the additional cost incurred from producing one more unit of output. It is found by dividing the change in total cost by the change in quantity. It shows how total cost changes as output increases.
  • Given a table of total cost and quantity, how do you find the marginal cost of producing the 200th pizza?
    To find the marginal cost of the 200th pizza, subtract the total cost at 199 pizzas from the total cost at 200 pizzas, then divide by the change in quantity (usually 1).
  • What is the best definition of marginal cost?
    Marginal cost is the additional cost of producing one more unit of output.
  • Marginal cost includes which of the following: fixed costs, variable costs, or both?
    Marginal cost includes only variable costs, since fixed costs do not change with output.
  • The marginal cost of hiring an additional worker is equal to what?
    The marginal cost of an additional worker is the increase in total cost divided by the increase in output resulting from hiring that worker.
  • What is marginal revenue?
    Marginal revenue is the additional revenue earned from selling one more unit of output.
  • What does marginal cost tell us about production?
    Marginal cost tells us how much extra cost is incurred to produce one more unit, helping firms decide how much to produce.
  • Why does the marginal cost curve typically have a U-shape when graphed?
    The marginal cost curve is U-shaped because marginal cost decreases as marginal product increases, then rises sharply as marginal product decreases due to diminishing returns.