Profit — Quiz

Question 20 • Personal Finance and Economics

What is the difference between marginal cost and marginal revenue?

Answer

Marginal cost is the money a producer might make from one more unit. Marginal revenue is the money a producer actually makes from one more unit.

Marginal cost is the money earned from selling one more unit of a good. Marginal revenue is the money paid for producing one more unit of a good.

Marginal cost is the money paid for producing one more unit of a good. Marginal revenue is the money earned from selling one more unit of a good.

Marginal cost is the money a producer actually makes from one more unit. Marginal revenue is the money a producer might make from one more unit.

Explanation

Marginal cost is the additional cost of producing one more unit, while marginal revenue is the additional money earned by selling one more unit. Choice A states both definitions correctly. Choices C reverses the terms, and B and D confuse actual cost or revenue with hypothetical amounts.

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